Car Finance Claims: Your Options Explained
- The Claims Guide
- Dec 14, 2025
- 4 min read
Car finance claims are now one of the most significant consumer redress issues in the UK. Millions of agreements may be affected, and consumers broadly have two ways to pursue compensation:
Using the FCA’s proposed redress scheme, or
Making an individual claim, usually with professional representation, through complaints, the Ombudsman, or court action.
Alongside this, it’s important to understand that there is not just one type of car finance claim. There are three distinct categories, with different time periods, evidence requirements, and potential outcomes.
Understanding both the routes and the types of claims can make a substantial difference to how much compensation a consumer ultimately receives.
The three types of car finance claims
1. Discretionary Commission Arrangement (DCA) claims (up to 2021)
DCAs apply to car finance agreements entered into before January 2021, when these arrangements were banned by the FCA.
Under a DCA:
the dealer or broker could increase the interest rate charged to the customer, and
their commission would rise the higher the rate went.
These claims form the core of the FCA’s proposed redress scheme, but the value of compensation can vary depending on how interest and refunds are calculated.
Why representation can help:Even within DCA claims, there is no single “correct” figure. A representative can ensure the calculation reflects:
the full interest impact over the life of the agreement, and
appropriate compensatory interest, rather than a simplified or conservative estimate.
2. Excessively high interest and unfair relationship claims (up to 2024)
Following the Supreme Court’s August 2025 decision, consumers can bring claims where the overall cost of the finance was unfair, even if a DCA cannot be shown.
These claims apply to agreements taken out up to 2024 and assess fairness under section 140A of the Consumer Credit Act. In the Supreme Court case, the Court treated commission as excessive by comparing it to the amount borrowed and the total charge for credit. On the facts, the commission equated to:
25% of the advance and
55% of the total charge for credit
Unlike DCA claims, this route is not tied to a specific commission model and looks at the real cost of the finance and the transparency of the arrangement as a whole.
3. Single-lender or restricted-panel claims (up to 2024)
Many car buyers believe a dealer is comparing options across the market. In practice, some dealers:
use a single lender, or
operate from a restricted panel, without making this clear.
The Supreme Court confirmed that this can contribute to an unfair relationship where the agreement creates a misleading impression about how the finance was selected.
These issues are particularly relevant where cheaper alternatives may realistically have been available.
Such claims can apply to agreements taken out up to 2024 and are often pursued alongside commission and interest-based complaints.
Option 1: The FCA redress scheme
The FCA has proposed an industry-wide redress scheme intended to compensate large numbers of consumers efficiently.
Under this approach:
firms would identify affected agreements,
compensation would be calculated using a standardised methodology, and
offers would be issued directly to consumers.
Benefits of the FCA route
Designed to be simple and accessible
Consumers do not need to use a representative
Intended to deliver consistency across millions of agreements
However, the scheme necessarily relies on standard assumptions and averages, particularly around interest calculations and compensation levels.
Option 2: Individual claims with representation
The alternative route involves pursuing an individual complaint, often with the support of a claims management company or law firm.
This can include:
building a detailed complaint,
engaging directly with the lender,
escalating where necessary, and
challenging offers that do not reflect the full loss suffered.
Why many consumers choose this route
Using a CMC is not about being an exception. Many consumers choose representation because they want:
to maximise the potential payout, as many claim FCA's scheme undervalues claims
confidence that their compensation has been properly calculated, and
support in dealing with lenders and complex processes.
Representation can be particularly valuable where:
multiple claim types apply to the same agreement,
the lender relies on generic calculations, or
an early offer appears low or incomplete.
The controversy around FCA payout estimates
One of the key debates in the market is whether standardised FCA redress calculations fully capture consumer loss.
Concerns raised by commentators include:
reliance on average compensation figures,
conservative approaches to compensatory interest, and
limited flexibility to account for overlapping unfairness (such as commission combined with restricted broking).
While the FCA scheme may provide a baseline level of redress, some consumers may receive less than they could recover if their claim were fully reviewed and challenged.
Professional representation can help ensure:
the agreement is assessed in full,
no potential claim is overlooked, and
compensation reflects the actual cost of the finance, not just a headline estimate.
Which option is right?
For some, the FCA scheme will be the simplest route. For others, especially those who want reassurance that their claim has been properly valued, representation offers a more thorough approach.
The key difference is not eligibility, but depth:
the FCA route is designed for scale and efficiency,
individual claims are designed to reflect the specifics of each agreement.
You do not need to use a claims management company to make your complaint to your lender. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free.