Motor Finance Commission Redress 2026: Are You Owed Compensation?

What Went Wrong

When you financed a car through a dealership using Hire Purchase or Personal Contract Purchase (PCP), the dealer often acted as a credit broker, arranging the finance with a lender on your behalf. Under a Discretionary Commission Arrangement (DCA), the dealer had some discretion to set the interest rate within a range set by the lender — and crucially, the dealer's commission increased the higher the interest rate they set.

This created a direct conflict of interest: the person negotiating your finance rate had a financial incentive to charge you more, and in many cases customers were never told this arrangement existed or how it worked. The FCA banned this specific commission structure from January 2021, but agreements made before that date under the old system are now under scrutiny.

Who Is Likely Affected

You may have a valid claim if:

• You took out car finance (Hire Purchase, PCP, or similar) before January 2021
• The finance was arranged through a dealer acting as a credit broker
• A Discretionary Commission Arrangement applied to your agreement, giving the dealer scope to influence the interest rate
• You weren't clearly told about the commission arrangement and its effect on your rate at the time

Agreements from after the January 2021 ban are generally not affected by this specific DCA issue, since the practice was prohibited from that point — though broader commission disclosure standards continue to be relevant across the industry.

How to Check and Claim

1. Identify your lender — this is the finance company that actually provided the credit, which may not be the same name as the dealership. Check your original finance paperwork, bank statements showing the regular payment, or your credit file (which lists historic finance agreements).
2. Contact the lender directly to ask whether a Discretionary Commission Arrangement applied to your agreement and request full details of how your rate was set.
3. Submit a formal complaint if you believe you weren't properly informed — the lender has a set period (typically 8 weeks) to respond.
4. Escalate to the Financial Ombudsman Service for free if you're unhappy with the response, don't receive one in time, or the lender rejects your complaint and you disagree with their reasoning.
5. Keep records of all correspondence, reference numbers, and any offers made, in case you need to escalate further.

Should You Use a Claims Management Company?

You don't need to. Making a complaint directly to your lender, and escalating to the Financial Ombudsman Service if necessary, is entirely free. Claims management companies and some solicitors offer to handle this for you on a "no win, no fee" basis, but they typically deduct a percentage — sometimes a significant one — from any compensation you're awarded. Since the process of contacting your lender and the Ombudsman doesn't require legal expertise, most people are better off pursuing it themselves and keeping the full redress amount.

How Redress Is Calculated

There's no single fixed compensation figure — the amount depends on:

• How much higher your actual interest rate was, compared with what would likely have applied without the dealer's commission-driven discretion
• The total amount of interest you paid over the life of the agreement
• How long ago the agreement was taken out and whether it has since been settled, refinanced, or is still ongoing

Because the calculation methodology has been the subject of regulatory and legal proceedings, always refer to current official FCA guidance and communications from your specific lender for the approach being used, rather than relying on figures quoted anecdotally online, which can vary significantly between cases and don't reflect a guaranteed outcome for your specific agreement.

What to Do While You Wait

Given the scale of claims involved across the industry, processing times can be lengthy. In the meantime:

• Keep your original finance paperwork and any correspondence safe
• Register a complaint promptly rather than waiting, since some claims may be subject to time limits depending on how the final scheme rules are structured
• Be wary of unsolicited calls, texts or emails from firms claiming to represent "the motor finance compensation scheme" and asking for upfront fees or personal banking details — verify any contact independently through your actual lender or the FCA's official channels