What Compensation Might Look Like in Car Finance Mis-Selling Cases
If you think your car finance agreement was mis-sold, one of the first questions you will probably ask is: what could compensation actually look like?
That is a fair question, but there is not one fixed answer for everyone. In car finance mis-selling cases, compensation is not usually a flat payout. It is meant to reflect what you lost because of the way the finance was arranged and sold to you.
Under the FCA’s proposed redress scheme, the average payment is expected to be around £700 per agreement, but many people could receive less and many could receive more. That figure includes interest.
If you are only just starting to look into this, the best place to begin is with Claim First’s mis-sold car finance claim page, where you can get a clearer idea of whether your agreement may be worth reviewing.
Why compensation amounts can vary so much
Compensation depends on what actually went wrong with your agreement.
For example, you may have been put into a finance deal where the broker or dealer was allowed to increase the interest rate to earn more commission. In other cases, the issue may be that the commission was unfairly high, or that the lender and broker had a tie arrangement that was not properly disclosed. The FCA says compensation may apply where you were not told about at least one of these arrangements.
That means your payout will depend on things such as:
How much you borrowed
How long the agreement ran for
How much extra interest you paid
What type of commission arrangement was involved
Whether you suffered any extra loss because of the way the agreement was sold
So while average figures can be useful, your own case will always come down to the details of your agreement.
What compensation may include
In simple terms, compensation is meant to put you back in the position you would have been in if the problem had not happened. That is also the general approach the Financial Ombudsman takes when it decides how a business should put things right. It can also award compensation for distress or inconvenience in some cases.
In practice, that could mean compensation includes:
Refunded overpayments
If you paid more because the interest rate was unfairly increased or the finance was structured in a way that was not properly disclosed, the main part of the compensation may be the difference between what you paid and what you should have paid.
Interest on top
The FCA says the average payout under the proposed scheme includes interest, which would normally be calculated using the average base rate plus 1% from the date of overpayment to the date compensation is paid.
Possible extra sums in some cases
Where the facts justify it, there may also be compensation linked to inconvenience or unfair treatment, especially if the complaint goes through a formal decision process with the Financial Ombudsman.
If you want to understand how Claim First handles claims more generally, you can also look at the About Us page and the company’s FAQ section.
Which agreements are most likely to be affected
This is one of the most important parts to get right.
The FCA’s proposed scheme may apply if you used motor finance for a car, van, campervan or motorbike between 6 April 2007 and 1 November 2024, and your lender included a discretionary commission arrangement, a high commission arrangement, or a contractual tie that you were not properly told about. The FCA also says PCP and HP agreements can fall within the scheme, while Personal Contract Hire is not included.
So if you signed a PCP or HP agreement, there is a stronger chance that your deal could fall into the group now being looked at.
If you are not sure what type of agreement you had, Claim First’s contact page is a practical place to start.
What a typical compensation example might look like
Say you took out a PCP agreement and the dealer increased the interest rate because they earned more commission that way. If that pushes up your monthly payments over the life of the agreement, compensation could be based on the extra amount you paid, plus interest.
If the extra cost to you was relatively modest, the payout might be a few hundred pounds. If the agreement was larger, ran for several years, and the rate was significantly inflated, the figure could be much higher.
That is why the £700 average should only ever be seen as a guide, not a promise. The FCA and MoneyHelper both make that clear.
Claim First’s own website also refers to an average of £700 plus interest per agreement for mis-sold PCP finance, which lines up with the broader public guidance currently available.
When compensation might be paid
Timing matters just as much as value.
On 4 March 2026, the FCA said that if it proceeds with the scheme, it expects to publish final rules in late March 2026.
It also said there is likely to be an implementation period of 3 months, with up to 5 months for older agreements, although firms could choose to process claims sooner. The FCA’s position is that millions of people could still receive compensation in 2026.
The FCA has also said that people who complain before the scheme starts should get any compensation sooner.
That means if you believe your agreement was mis-sold, it may be worth acting now rather than waiting to see what happens later.
What affects the size of your claim
No 2 agreements are exactly the same, but these are some of the main things that can affect what compensation looks like:
The amount you borrowed
Larger finance agreements can create larger losses if the interest rate was unfairly increased.
The term of the finance
The longer the agreement lasted, the more time there was for excess interest to build up.
The type of arrangement involved
A discretionary commission arrangement can have a very direct effect on what you paid. MoneyHelper says DCAs allowed brokers to increase the interest rate and earn more commission, and that agreements made after they were banned in January 2021 will not include a DCA.
The paperwork and explanation you were given
The Financial Ombudsman highlights documents such as the credit agreement, initial disclosure document, pre-contract information, and adequate explanation documents as relevant when complaints are looked at.
If you are missing paperwork, that does not automatically mean you have no case. It simply means the agreement may need a closer review.
Why it is still worth checking even if you are unsure
A lot of people assume there is no point checking unless they know for certain they were overcharged. In reality, many drivers do not know exactly how the commission worked in their agreement, or whether it was disclosed properly.
That is why a careful review matters. If your finance was sold fairly, at least you will know where you stand. If it was not, you may be able to recover money you should never have paid in the first place.
If you are interested in the wider claims support Claim First offers, you can also explore pages such as payday loan refunds, housing disrepair claims, and scam recovery. For general site information, there are also pages covering complaints procedure, privacy policy, terms and conditions, and accessibility.
FAQs
How much compensation could you get for mis-sold car finance?
There is no fixed amount. The FCA expects an average of around £700 per agreement under its proposed scheme, but some people may get less and others more depending on the facts of their case.
Does compensation include interest?
Yes. Under the FCA’s proposed scheme, the average figure includes interest, which would normally be calculated using the average base rate plus 1% from the date of overpayment to the date compensation is paid.
Are PCP and HP agreements included?
Yes, PCP and HP agreements may be included if they fall within the relevant date range and involve an arrangement that was not properly disclosed. Personal Contract Hire is not included in the FCA’s proposed scheme.
What dates matter for car finance compensation?
The FCA says the proposed scheme may apply to motor finance agreements entered into between 6 April 2007 and 1 November 2024. For discretionary commission arrangements specifically, MoneyHelper says agreements made after the January 2021 ban will not include a DCA.
Do you need all your documents to start?
No, not always. Documents can help, but many people begin with limited information. The key thing is to review what you do have and raise the issue if you believe the agreement was not properly explained.
Final thoughts
Compensation in car finance mis-selling cases is rarely a neat, fixed number. It is usually based on what you actually lost because of the way the agreement was arranged and sold to you. For some people, that may be a few hundred pounds. For others, it could be much more.
If you think something about your agreement did not feel right, now is a sensible time to look into it. Visit Claim First to check whether your car finance agreement could be worth a claim.
