Which lenders were involved in car finance mis-selling?

Important update: The FCA redress scheme is partially suspended

This article reflects the position as at 9 October 2026. If you entered into a motor finance agreement between 6 April 2007 and 1 November 2024, please note the following:

• The redress scheme is partially suspended: The Upper Tribunal will hear four challenges to the scheme on 14-18 December 2026 or 16-26 February 2027. Lenders are not currently required to calculate or pay redress, and payments are not expected to begin until 2027 at the earliest. If you have complained and your lender considers you are not owed compensation, it must respond by the applicable deadline, except for complaints it considers were out of time when the scheme was made and cases relying on the captive-lender contractual-tie exception.
• Revised eligibility estimate: The FCA now estimates that 12.1 million agreements are eligible for compensation, down from the 14.2 million estimated in its 2025 consultation.
• Increased compensation estimate: The FCA now anticipates average redress payouts of £829 per mis-sold agreement.
• Compensatory interest changes: The regulator has introduced a minimum 3% floor for compensatory interest; however, the rate applied to awards within the redress scheme can no longer be challenged.
• You may not hear from your lender: The normal scheme timetable is affected by the partial suspension. Lenders must still respond to complainants they consider are not owed compensation, subject to exceptions. If the scheme proceeds, contact obligations also cover certain consumers who have not complained, including those potentially owed compensation and certain time-barred cases. If you do not hear from your lender, you could still have a valid claim but risk missing out entirely.

The Financial Conduct Authority (FCA) confirmed its final motor finance redress rules on 30 March 2026. It estimates that 12.1 million agreements entered into between 6 April 2007 and 1 November 2024 are eligible for compensation, around 37% of agreements in that period. The scheme is currently partially suspended while four legal challenges are considered.

This figure alone exposes the level of alleged misconduct across the motor finance market and highlights that it was not confined to a handful of rogue operators. Every lender that provided car finance during the period covered by the final rules may face redress liabilities.

Why almost all lenders could face redress liabilities

The FCA’s final scheme addresses three categories of potentially unfair arrangements, each of which was prevalent across the motor finance market.

1. Undisclosed discretionary commission arrangements (DCAs)

DCAs allowed car dealerships, acting as car finance brokers, to influence the interest rate offered to consumers, with their commission increasing in line with the rate. The regulator banned DCAs on 28 January 2021, having confirmed in July 2020 that it would do so after undertaking a significant review of the motor finance market between 2017 and 2019 and subsequently consulting on the move.

An undisclosed DCA may give rise to redress, subject to the scheme’s conditions and exceptions. There is no fixed award for a DCA: the lender must apply the final calculation rules to the individual agreement.

Initially, the regulator’s investigation, which began on 11 January 2024, and the subsequent pause on motor finance complaint handling, which ended on 31 May 2026, were focused exclusively on DCAs. The Court of Appeal’s ruling in Johnson, Wrench and Hopcraft, handed down on 25 October 2024 and partially upheld by the Supreme Court on 1 August 2025, paved the way for other commission models also to be subject to scrutiny. 

As well as increasing potential redress exposure for lenders who used DCAs, this also meant that lenders who did not believe they would face any liabilities because they had never used DCAs now faced the prospect of paying significant compensation to consumers. In some cases, consumers who were initially told they did not have a DCA and were thus ineligible for compensation may now fall within the scope of the redress scheme if either a high commission arrangement or a contractual tie was present.

2. Undisclosed high commission arrangements

Under the final rules, a high commission arrangement is one in which the commission is:

• 39% or more of the total cost of credit; and
• 10% or more of the total loan amount.

Both thresholds must be met. The presence of high commission does not automatically guarantee compensation: disclosure, time limits and the scheme’s other conditions and exceptions also matter.

3. Undisclosed contractual ties

Tied arrangements, often associated with advance commissions, meant that dealers were obliged to offer a particular lender exclusivity or a right of first refusal, sometimes while presenting themselves as independent or as choosing from a panel of lenders.

The final rules include an exception where the lender can prove that there were visible links between the lender, manufacturer and franchised dealer. Contractual ties, including this exception, are among the matters being challenged at the Upper Tribunal.

How these mechanisms allowed mis-selling to occur at scale

Each of these practices, when in use, was embedded into the commercial architecture of the motor finance market by design as a feature of finance products. While lenders have brought significant and wide-ranging arguments in their own defence, they are the party that designed these commission structures and set pricing frameworks. Contrary to many lenders' arguments, CP25/27 states that 'many firms did not comply with the law or our disclosure rules that were in force when they sold loans.’

Eligibility depends on the arrangements and disclosure in an individual agreement, rather than the lender’s name alone. The FCA’s final estimate is that approximately 37% of agreements in the relevant period are eligible for redress. A lender may have both eligible and ineligible agreements.

Historical examples of lenders’ redress provisions

Making a provision is not an admission of liability; it is an accounting acknowledgement that a lender anticipates a material probability of having to pay redress. However, the sums set aside by lenders highlight the scale of alleged misconduct that occurred between 6 April 2007 and 1 November 2024.

The table below records the publicly reported figures cited when this article was first published on 3 March 2026. It is retained as historical context: provisions can subsequently increase, decrease or be used, and current figures should be checked in each lender’s latest financial statements. The list is not exhaustive and does not determine which customers can claim.

Several lenders had already increased their provisions when these figures were reported. Accounting estimates can change as the legal and regulatory position develops; the amount a lender has set aside does not determine an individual consumer’s entitlement.

Which lenders have admitted using DCAs?

DCAs are one of the three types of arrangement addressed by the final scheme. Whether your agreement involved a DCA is relevant to eligibility, but an agreement without one may still qualify because of high commission or a contractual tie, subject to the rules.

Money Saving Expert has gathered a significant volume of data from its readers on lenders' responses to DCA-related enquiries, providing a useful, albeit unofficial, indication of which lenders used DCAs from 6 April 2007 until they were banned on 28 January 2021, and at what scale.

Data correct as of 26 February 2026.

The wide range of lenders to have acknowledged using DCAs is consistent with the regulator’s own findings that they were being used in approximately 90% of car finance agreements in 2007, with their use gradually declining before the FCA banned their use in January 2021. It must also be noted that falling DCA use was replaced almost like-for-like by the inclusion of fixed commissions in motor finance agreements, which further supports the disclosure made by the regulator to the Supreme Court in December 2024 that 99% of motor finance agreements entered into since 2007 entailed a commission payment to a broker. 

What if a lender has not admitted to using DCAs or made a redress provision?

The absence of an acknowledgement of having historically used DCAs or a publicly disclosed provision does not necessarily mean that a lender will not have redress liabilities, for several reasons.

The FCA’s final redress scheme covers more than DCAs

Even if a lender did not use DCAs, it may still face redress liabilities for agreements involving undisclosed high commissions or contractual ties. The FCA's investigation uncovered 'widespread failures' across the arrangements addressed by its motor finance work, and the regulator has been clear that car finance agreements entered into between 6 April 2007 and 1 November 2024 will be assessed against its final rules and criteria.

Provisions are a commercial decision, not a legal determination

Lender decisions to set aside and disclose provisions may be influenced by various factors, including: 

• public reporting requirements;
• accounting standards;
• market expectations; and
• commercial strategy.

Smaller lenders and non-listed companies, for example, may not be subject to the same public reporting requirements as major banking groups, but may still face significant liabilities.

Lenders have strong incentives to minimise their stated liabilities

Throughout the regulator’s investigation, and even after the Court of Appeal and the Supreme Court have clarified the legal position around non-disclosure of commissions, lenders have continued to maintain, amongst other things, that:

• they complied with the law and regulations as they were in force at the time;
• consumers have suffered no harm;
• the FCA’s proposals are disproportionate; and
• the regulator’s numbers are wrong.

Major lenders will also be mindful of the impact of making provisions on share prices and shareholder sentiment. Both the Court of Appeal and Supreme Court rulings in Johnson, Wrench and Hopcraft had a significant impact on publicly traded lenders’ share prices market-wide. Likewise, there has often been a reaction when individual lenders have disclosed new provisions, which usually occurs alongside the reporting of quarterly or annual results.

Ultimately, the important point is that a lender disputing liability does not mean that it has none.

The regulator’s analysis is based on lender-supplied data

This is one of several reasons why lenders' continuing criticism of the FCA's approach is confusing. Regardless, the regulator's findings make clear the scale of the issue and the extent to which it spans the market, whether or not individual lenders have made any public acknowledgement of their involvement.

Understanding whether you are eligible for compensation

The lender’s identity is only part of the assessment. The final rules set out the relevant arrangements, disclosure standards, time limits and exclusions. For example, no-interest agreements and commissions at or below the applicable minimum thresholds may be treated as fair, and certain previously resolved cases and very high-value loans are excluded. Whether you qualify depends on the facts of your agreement.

How much compensation will I receive?

The FCA’s final estimate is an average of £829 per eligible agreement, including compensatory interest. This is an overall estimate, not a guaranteed payment or a separate fixed amount for each commission category.

Most eligible awards use the average of commission and an estimated loss based on an APR adjustment, with caps and compensatory interest rules also applying. A different commission-repayment remedy applies to certain cases closely aligned with the Johnson case.

You may have more than one eligible agreement. Compensatory interest is included in the FCA’s £829 average and is calculated under the scheme’s prescribed rules, with a minimum rate of 3% in any year. The scheme does not allow consumers to challenge that interest rate.

We explore how much compensation you may receive and the factors that may influence this in more detail in this guide.

When will I receive my compensation?

Scheme payments are not expected before 2027. The Upper Tribunal hearings are provisionally listed for 14–18 December 2026 or 16–26 February 2027, with judgment to follow. The outcome and any appeal will affect the timetable.

Will my lender contact me if I am owed compensation?

The rules do not require lenders to contact every former customer. Contact duties depend on whether you have complained, the arrangements in your agreement and the applicable exceptions. During the partial suspension, lenders must still respond to certain complainants they consider are not owed compensation, but communications about compensation owed are affected by the suspension.

Silence from your lender does not establish whether you have a valid claim. You can complain now for free and update your contact details. Our FAQs explain the continuing response deadlines and exceptions.

How Harcus Parker can help

If you had car finance between 6 April 2007 and 1 November 2024 and have not already made a complaint, consider starting your claim now, rather than waiting to see if your lender contacts you under the redress scheme. Should you wait to begin a claim and your lender subsequently does not contact you, you may only have a limited time to raise a complaint, or risk missing out on receiving anything at all.

The FCA’s final redress scheme is designed to enable you to bring a car finance mis-selling complaint yourself at no cost. However, instructing a solicitor to manage your claim means you do not have to navigate this process and interpret legalese and potentially complex communications from lenders alone.

At Harcus Parker, we can, among other things:

• identify your historical car finance lenders, even for agreements dating back to 6 April 2007, and determine whether you may be eligible for compensation;
• verify your lender’s calculations and challenge any compensation offer that does not adequately reflect your loss and hold lenders to the terms of the redress scheme; and
• investigate any additional claims that fall outside the scope of the regulator’s redress scheme, including the potential mis-selling of GAP insurance and other add-on products, whether you may have grounds for an irresponsible lending claim. The scheme’s compensatory interest rate cannot be challenged, although the lender’s application of the calculation rules can be checked.

In a market where mis-selling was this widespread, the question is not which lenders were involved, but whether your agreement was among the millions affected.

Get the answers you need. Register your car finance claim with Harcus Parker here.