Car finance mis-selling scandal: How to find out if you’re owed £1,000s as case concludes
Drivers may be due thousands of pounds thanks to a mis-selling scandal that has drawn parallels with the notorious Payment Protection Insurance (PPI) debacle.
Thanks to the car finance mis-selling scandal, many vehicle owners have discovered they’ve been out of pocket for years without realising it.
At its core, the scandal revolves around undisclosed and often “secret” commissions paid by lenders to car dealers, leading consumers to unknowingly enter into finance agreements with inflated interest rates.
Find out how you may be entitled to thousands in compensation. Act now to discover if you’re affected and claim whatâs rightfully yours with My Claim Group.
The extent of the scandal has only recently come to light, with a major UK Supreme Court judgement due later in 2025. Once the ruling is handed down, car finance lenders will find out how much they’re liable to pay back to customers.
If you bought a car, van or motorbike via Personal Contract Purchase (PCP) or Hire Purchase (HP) before 28 January 2021, you could be due £1,000s back.
My Claim Group (MCG) is an organisation that helps those impacted or who think they may have been affected get their money back.
Find out how much you could be owed on My Claim Group.
According to the firm, 40% of HP and PCP finance deals between 2007 and 2021 may have included secret commissions. This means you might have overpaid and could be due compensation. Across 1.2million claims so far, MCG has helped vehicle owners to submit claims that could be worth £4,000 on average.
Here is our guide to the car finance mis-selling scandal.
Before the regulatory changes in 2021, many car finance agreements were structured around “discretionary commission arrangements.” In these arrangements, car dealers had the ability to set the interest rates on the finance deals they offered. The higher the interest rate, the greater the commission they received.
This setup created a clear conflict of interest, as dealers were financially incentivised to offer consumers loans with higher interest rates, even if it wasnât the most cost-effective option. Unfortunately, this often happened without fully disclosing the commission structures to customers. As a result, consumers frequently ended up with more expensive loans than they would have otherwise, unaware that the terms they were offered were influenced by the dealerâs desire to maximise their commission.
The Financial Conduct Authority (FCA) took action in January 2021 by banning discretionary commission models, aiming to improve transparency and safeguard consumers. However, further investigations uncovered that many of these problematic methods had been in place as far back as 2007, prompting a thorough review of past lending practices.
A key turning point came in October 2024, when the Court of Appeal ruled that the failure to disclose commissions on car loans was unlawful. This decision expanded the potential for mis-selling claims, as it set a precedent that any undisclosed commission arrangements could now serve as a legitimate basis for consumer compensation.
The ruling has led to a surge in complaints, with the Financial Ombudsman Service reporting a record 18,658 new car finance cases in the last quarter of 2024.
The financial repercussions for lenders have been huge. Following the Court of Appeal’s decision, Lloyds Banking Group has increased its provision for potential compensation payouts to £1.1 billion, for example. Analysts speculate that the total impact on Lloyds could exceed £4 billion.
Other major lenders, including Santander UK, Close Brothers, and Barclays, are also facing significant potential liabilities, with some industry estimates that total compensation costs could reach up to £30 billion.
The scandal prompted government intervention. In January 2025, UK Chancellor Rachel Reeves sought to intervene in the Supreme Court case to protect lenders from potential multibillion-pound payouts, expressing concerns about the broader economic implications and the potential impact on consumers’ access to car loans.
Simultaneously, claims management companies such as My Claim Group have been actively encouraging consumers to file complaints.
The Supreme Court is now reviewing a key appeal by car loan providers, following previous rulings that favored consumers. The FCA has temporarily paused the complaints process pending the court’s decision, which is due later this year. The outcome of this appeal will be key in determining the liabity of lenders.
If you think the scandal may have impacted you, visit the My Claim Group website to find out more information and begin the easy process to discover whether you are owed money.