How much car finance compensation will I receive?

In its motor finance redress proposals, the Financial Conduct Authority (FCA) estimated that consumers will receive an average of £700 per mis-sold agreement.

That figure is a useful starting point, but it is an average based on the regulator's analysis of 32 million agreements, of which it estimates 14.2 million are within the scope of the proposed scheme. Some consumers will receive less, and some may receive considerably more, depending on the specific commission arrangements involved and how lenders calculate their redress.

Why the FCA’s average may not reflect your true loss

The FCA's estimate falls within its proposed scheme, designed to standardise outcomes at scale and deliver redress to millions of people as quickly and efficiently as possible. The regulator’s proposals cover motor finance agreements entered into between 6 April 2007 and 1 November 2024, in which car finance brokers, who were usually car dealers, did not adequately disclose commissions or conflicts of interest to consumers.

The FCA has also set out an approach to compensatory interest within the proposed scheme, based on the Bank of England base rate (averaged over the relevant period) plus one percentage point, calculated on a simple interest basis.

Even before considering the specific details of your own agreement, there are three immediate reasons why the regulator’s £700 average may not be what you receive or be representative of your loss.

1. The proposed scheme is about remedying defined misconduct within a defined scope; it is not a bespoke assessment of every consequence of each agreement.
2. The lender-led nature of the scheme means that lender calculations may produce different outcomes.
3. Interest is part of the overall picture, and the time period during which interest accrues will vary by claimant.

When will motor finance compensation be paid?

The FCA plans to publish its final redress rules by the end of March 2026. The regulator has also extended the pause on lenders' requirements to provide final responses to motor finance commission complaints until 31 May 2026, after which lenders must recommence providing final responses within eight weeks of receiving a complaint.

If the FCA keeps to that timetable, redress payments may begin in mid-2026.

Can I get more than £700 compensation per agreement?

Potentially, yes. There are two main reasons why your eventual compensation award may exceed the FCA’s estimated scheme average.

1. Your in-scope redress outcome may exceed £700

The regulator’s estimated average is naturally skewed by the inclusion of low-value claims alongside highly significant ones. If your agreement sits at the higher impact end of the FCA’s in-scope categories, for example, because you had a high-commission arrangement rather than a discretionary commission arrangement (DCA), your redress calculation may be significantly higher than the regulator’s £700 estimate.

In a table on page 271 of its redress scheme consultation paper, CP25/27: Motor Finance Consumer Redress Scheme, the regulator puts the estimated mean redress for inadequate disclosure of a high commission arrangement at £1,108.35. The same table also estimates that inadequate disclosure of a Johnson-level commission payment and a tied arrangement would result in mean redress of £2,532.23.

Johnson refers to the landmark Supreme Court ruling handed down on 1 August 2025, which paved the way for the regulator to formulate and publish its redress scheme proposals.

2. You may have additional, separate issues outside the scheme’s core scope

Even where the redress scheme rules mean that you will receive compensation for eligible motor finance agreements you entered into between 6 April 2007 and 1 November 2024, they will not capture any additional mis-selling issues you may have experienced within your broader vehicle transaction.

Such issues may include mis-sold add-on products, such as GAP insurance. The FCA has previously scrutinised the GAP insurance market, temporarily pausing sales across 80% of the market in February 2024 after finding that some firms were paying up to 70% commission on GAP policies.

While potential additional claims are not the same as motor finance redress, they are a clear indicator of how your total ‘compensation picture’ may extend beyond any mis-sold car finance agreements.

How instructing a solicitor can change your compensation outcome

The FCA’s proposed redress scheme will allow you to complain and get compensation without instructing a solicitor. However, one of many practical reasons you may wish to consider doing so is that a solicitor can look beyond the regulator’s redress pathway and assess whether you may have grounds to bring additional claims.

These may include:

• Multiple agreements: given the lender-led nature of the FCA’s proposed scheme, your compensation outcome may depend on which agreements a lender can match you with. A solicitor can help to build a complete picture of agreements within scope, ensuring you get compensation for each mis-sold agreement.
• Add-on products: a solicitor can examine whether commissions on GAP insurance or other add-on products were adequately disclosed and advise on the implications of accepting any redress offer, including whether it may affect claims related to these issues.
• Loss and causation beyond your headline redress calculation: if you have suffered consequential loss or if your lender should not have extended you credit, a solicitor can investigate whether you have grounds for an irresponsible lending claim or may qualify for a higher rate of compensatory interest on your motor finance redress award.

Register your motor finance claim with Harcus Parker

The regulator’s estimated average of £700 per mis-sold motor finance agreement is a straightforward anchor point for your redress award. However, if you want to understand whether you may be eligible for a more significant award, you need to know:

• whether your motor finance agreement is likely to fall within the scope of the FCA's proposed redress scheme; and
• whether any add-ons involved in your overall transaction warrant further scrutiny.

Register your motor finance claim with Harcus Parker, and we can help you towards the answers you need and the compensation to which you are entitled.