Car finance mis-selling: Am I eligible for compensation, and what do I have to do to about claiming it?

The Financial Conduct Authority (FCA) is in the advanced stages of determining whether a formal compensation process should be introduced for consumers who were unfairly sold car finance under now-banned commission models.

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About 14 million car finance agreements could be due compensation under the UK financial watchdog’s proposed redress scheme.

The FCA said many motor finance firms did not comply with the law or its rules when they sold car loans over approximately 17 years.

It means millions of motorists could be in line for compensation from their lender.

Here, we take a look into the scheme and what consumers can expect.

WHY HAS THE FCA SET UP A COMPENSATION SCHEME?

The watchdog was looking into data from around 32 million motor finance agreements made between April 6 2007 and November 12024, incorporating loans on a car, motorbike or van.

About 44% of those will be considered unfair and will qualify for compensation under its proposals.

Most of the car finance deals covered by the scheme involve so-called discretionary commission arrangements (DCAs).