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What you need to know about the car finance compensation scheme
Western Mail
|November 12, 2025
Chances are you've heard about car finance and a new compensation scheme for people who may have been mis-sold credit to buy a vehicle. By the look of my postbag many readers are flummoxed about what the announcement means. Here's a guide to your rights.
The Financial Conduct Authority (FCA) has announced proposals for a compensation scheme for millions of drivers who may have been mis-sold deals to buy a car or vehicle on finance
Key points to remember are:
You need to have been sold a motor finance agreement taken out between April 6, 2007 and November 1, 2024.
The compensation scheme only applies if you were sold an unfair contract, given inaccurate information or excessive commission was paid by the lender to the broker.
It's estimated the scheme will apply to just under half of people (44%) who were sold policies during this period.
The FCA estimates up to 14.2 million people are affected.
Lenders could pay out £8.2billion in compensation.
The average payout is predicted to be £700 - but the sum will vary.
Bear in mind these are proposals. We'll know for sure what's happening in early 2026.
What's the reason behind it?
This story is from the November 12, 2025 edition of Western Mail.
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