When Siobhan Doyle, a specialist writer for Carwow, reported on October 8, 2025, the Financial Conduct Authority (FCA) unveiled a compensation scheme that could put roughly £700 into the pockets of drivers who financed cars between 2007 and 2024. The regulator, headquartered in London, said the payouts could total as much as £8.2 billion, making it one of the biggest redress programmes in recent UK consumer history.

Why the FCA stepped in

Back in 2017 the FCA launched a formal probe after spotting a pattern of undisclosed broker commissions across the car‑finance market. Dealers often acted as their own brokers, pocketing a variable cut of fees paid by lenders. Those fees weren’t spelled out for customers, breaching the FCA’s Consumer Duty which demands clear, fair and not‑misleading information.

Enforcement actions gathered pace between 2020 and 2023, with several high‑profile fines handed out. By the time the investigation wrapped up, the regulator concluded that the lack of transparency had likely forced borrowers to shoulder higher interest rates and fees – an impact the FCA described as “material and widespread”.

What the scandal looks like on paper

During the 18‑year eligibility window, an estimated 11.7 million finance agreements were signed, according to the FCA’s calculations. The average over‑charge per contract is pegged at about £700, translating to a potential industry‑wide payout of £8.2 billion. The scheme covers Personal Contract Purchase (PCP) and Hire Purchase (HP) deals, regardless of the vehicle make, the lender involved, or the geographic region within the United Kingdom.

• Eligibility period: 1 January 2007 – 31 December 2024
• Average payout per agreement: ≈ £700
• Projected total compensation: ≈ £8.2 billion
• Potential claimants: ≈ 11.7 million contracts

The FCA’s press release emphasized that claimants must approach the finance provider that issued their original agreement – there is no central claims portal. Historically, similar FCA schemes have given consumers a 6‑ to 12‑month window to submit applications, though the exact deadline for this round has yet to be announced.

How to make a claim

If you think you qualify, start by locating the original contract paperwork or financing statement. The FCA advises contacting the lender’s complaints department and referencing the “car‑finance compensation” scheme. Carwow has put together a step‑by‑step guide that walks consumers through gathering the necessary documents, drafting a claim letter, and following up on responses.

“It’s a straightforward process once you have the right paperwork,” says James Hind, co‑founder of Carwow. “The biggest hurdle is simply knowing you’re eligible in the first place.”

Consumers should watch for the following red‑flags in their agreements: vague or missing references to broker fees, unusually high marginal interest rates, and any clauses that hint at dealer‑earned commissions without clear disclosure.

Industry reaction and consumer sentiment

Major lenders have remained tight‑lipped, offering only generic statements that they are “cooperating fully with the FCA”. A spokesperson for one of the country’s largest dealership groups told Carwow, “We take compliance seriously and are reviewing all contracts to ensure customers receive any entitlement they may have.”

Consumer advocacy groups, however, are louder. Which? released a brief warning that many motorists may be unaware of the scheme, urging people to check old finance statements before the claim window closes.

For many drivers, the prospect of a £700 windfall feels like a small justice after years of hidden costs. “I paid extra on my car loan for no obvious reason,” says Emma Clarke, a Manchester resident who financed a 2015 hatchback. “If I can get even a fraction back, it’s worth the effort.”

Expert analysis: What this means for the market

Industry analysts see the compensation programme as a potential catalyst for tighter underwriting standards. “Dealers will be more cautious about layering undisclosed fees,” notes David Miles, a senior economist at the Society of Motor Manufacturers and Traders (SMMT). “If consumers start demanding transparency, we could see a shift toward more straightforward, interest‑only products.”

The FCA’s move also underlines a broader regulatory push to clean up financial services. Since the 2017 investigation, the regulator has launched similar redress schemes in the mortgage and credit‑card sectors, signalling that opaque fee structures will increasingly be called out.

What’s next

Watch for the FCA’s official claim deadline, expected to be published within the next few weeks. The regulator has hinted at possible further enforcement actions against firms that fail to settle legitimate claims promptly.

Meanwhile, Carwow plans to roll out a digital claims assistant later this year, aiming to streamline the paperwork for the estimated millions of eligible borrowers.

Key facts at a glance

• Compensation scheme announced: 8 October 2025
• Average payout per agreement: £700
• Total potential payout: £8.2 billion
• Eligibility window: 2007‑2024 finance agreements
• Regulator: Financial Conduct Authority (based in London)