UK Drivers Face Missing £700 Commission After Industry Shake Up

Bristol, United Kingdom - A major issue affecting millions of people who bought vehicles using PCP finance has taken a new turn.

Some drivers could miss out on payouts of around £700 because of changes in the compensation scheme.

During 6 April 2007 and 1 November 2024, car dealers and finance brokers sometimes received hidden commission payments that were not always made clear to customers and may have increased the interest rates that drivers paid on their car finance loans.

The regulator responsible for UK financial services, the Financial Conduct Authority (FCA), set up plans for a large-scale compensation scheme to help people who were unfairly charged.

Under early proposals, drivers could receive an average payout of about £700 per finance agreement. In some cases, if a person had taken out more than one finance deal, they could receive more than £700, with some receiving as much as £1,000 or £2,000.

However, recent developments suggest that the compensation scheme may be changed in ways that could reduce the number of people who qualify. There is particular attention on whether carmakers' own finance arms (in-house lenders) need to be part of the scheme. Some car manufacturers and banks have argued that if they are required to pay out, it could affect investment in the UK car industry.

At the heart of the matter are three types of arrangements that were widely used in the past:
Hidden or undisclosed commissions paid to dealers and brokers.

Commission paid at levels that were not clearly explained to customers.

Agreements where the lender was linked closely with the dealer, but this was not made clear to the person signing the contract.

If any of these applied to your finance agreement, you might be eligible for compensation under the proposed scheme. But the exact rules are still being finalised and could be different from what was first expected.

Why This Matters
The car finance issue is one of the biggest consumer redress cases in recent UK financial history. Up to 14 million drivers* could potentially be eligible for compensation if they took out a qualifying agreement during the relevant period. Many of these agreements were arranged at the point of sale by car dealers.
Industry figures suggest that lenders may have to pay out billions of pounds in total. Some banks and finance businesses have already set aside large sums of money to cover expected compensation costs. This includes tens or hundreds of millions of pounds.

A spokesperson from the FCA said they are carefully considering feedback on the compensation rules and that no final decisions have been made yet. People who believe they may be affected are encouraged to make complaints sooner rather than later.

What Drivers Should Do Now
According to Claims Bible (https://claimsbible.com/), if you think you might be affected, here are the steps you should consider:

Check your car finance documents
• Find out if you took out a PCP or hire purchase agreement in the period from April 2007 to November 2024.

Look for commission details
• See if your contract mentioned how the dealer or broker was paid. If it didn't, you may have grounds to complain.

Submit a complaint soon
• You can complain to your lender now. Many people are advised to do this before the compensation scheme begins so their case can be reviewed early.

Use the free template on the FCA website
• The FCA offers a free complaint letter that you can use. You do not need to pay a claims company or solicitor to submit a complaint. See letter template here: https://www.fca.org.uk/publication/documents/template-motor-finance-complaint-letter.docx

Avoid fraud
• There have been warnings about fraudulent calls and messages claiming to be about car finance payouts. Fradusters may ask for personal information. Be careful and only use official sources.

The FCA also reminds people that if you have already complained directly to your lender, your case will be included in the scheme once it starts. If you used a claims company, you may have to pay fees out of your compensation.
Looking Ahead

Final rules for the compensation scheme are expected to be published by the FCA in early 2026. Once the rules are set, lenders will begin contacting eligible customers. Those who have already complained will be included, and others will have the chance to join the scheme.

The FCA estimates that the average payout could be about £700 per agreement, though the exact amount may vary depending on individual circumstances. If you had more than one qualifying agreement, the total you receive could be higher.
*https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme

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claimsbible.com is a UK-focused claims management resource that helps people identify and pursue compensation for various losses and mis-selling issues. It offers free tools, guides and checkers to assess eligibility for claims. For example, on mis-sold car finance, unaffordable loans, data breaches or fraud-related losses and, if a case appears valid, connects users with FCA-regulated partners or solicitors who can handle the legal work on a no win, no fee basis. Their aim is to simplify the claims process, provide clear information and increase the chances of getting compensation where people have been wronged.

This release was published on openPR.