Which lenders were involved in car finance mis-selling?

Having completed what it called an ‘extensive review’ covering data from 32 million agreements since beginning its investigation on 11 January 2024, the Financial Conduct Authority (FCA) published proposals for a motor finance redress scheme on 7 October 2025, estimating that compensation would be due on an estimated 14.2 million agreements entered into by consumers between 6 April 2007 and 1 November 2024.

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 regulator’s proposals may face redress liabilities.

Why almost all lenders could face redress liabilities

The FCA’s redress proposals address three categories of misconduct, 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.

On page 271 of its consultation paper CP25/27: Motor Finance Consumer Redress Scheme, the FCA estimates that an average compensation award of £665.62 will be due on 11.4 million agreements in relation to which a DCA was not disclosed adequately.

Initially, the regulator’s investigation, which began on 11 January 2024, and the subsequent pause on motor finance complaint handling, which will lift 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

In CP25/27, the FCA defines a high commission arrangement as one in which the commission is:

• 35% or more of the total cost of credit; and
• 10% or more of the total loan amount.

The regulator estimates that an average of £1,108.35 in compensation will be due in relation to 2.9 million agreements involving an undisclosed high commission.

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 FCA initially estimated that an average of £686.18 in compensation would be due in relation to 3.2 million agreements due to the inadequate disclosure of a contractual tie. However, a February 2026 Financial Times report citing ‘two people briefed on the regulator’s [redress] plans’ suggested that the number of agreements in scope for the inadequate disclosure of a contractual tie is likely to fall, specifically in relation to car manufacturers that use in-house finance operations, such as Mercedes-Benz and BMW.

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.’

It is, therefore, not a question of whether a particular lender was ‘one of the bad ones,’ but what mechanisms lenders were using, and how they were using them, to incentivise their brokers to achieve sales of their credit products. It would be unfair to say that the FCA’s findings demonstrate that lender misconduct was the norm; less than half (44%) of the agreements the regulator has analysed fall within the scope of its redress proposals. That proportion may yet fall depending on any changes to the final rules regarding how the scheme will handle certain contractual ties. However, misconduct was also far from the exception.

Which lenders have made 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.

This list is not exhaustive and includes only publicly disclosed provisions. Many other lenders, including smaller and specialist motor finance providers, may also face significant liabilities but have not yet reported them or are not required to do so publicly.

Many of the lenders listed in the table above have increased their provision at least once since first disclosing they had made one, reflecting the growing clarity around their potential liabilities as the FCA's investigation has progressed and the Court of Appeal and Supreme Court handed down verdicts in the Johnson, Wrench and Hopcraft test cases. The provisions may well rise again.

Which lenders have admitted using DCAs?

As DCAs are one of the three pillars in the regulator’s redress proposals and were used in the majority of motor finance agreements where the FCA has identified compensation is likely to be due, whether you had a DCA may be the critical factor in whether you are eligible for redress.

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 proposed 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 all three elements covered in its redress scheme proposals, 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 question of which lender provided your car finance is important. However, it is not the only factor that will determine whether you are eligible for redress. The FCA’s final redress rules, which the regulator says it will publish before the end of March 2026, will outline the criteria under which you may be eligible. Whilst a February 2026 report suggests that the most significant material changes to the FCA’s proposals will relate to some agreements affected by contractual ties, this appears likely to concern agreements involving promotional offers like 0% APR deals, rather than changing the criteria around non-disclosure if a fixed commission was paid or DCA was in use.

How much compensation will I receive?

The regulator estimates that an average of £700 compensation will be due on mis-sold motor finance agreements entered into between 6 April 2007 and 1 November 2024. This is an average derived from its analysis of agreements across all three categories and, as detailed earlier, is broken down as average redress of:

• £665.62 for an undisclosed DCA;
• £1,108.35 for an undisclosed high commission; and
• £686.18 for an undisclosed contractual tie.

You may receive significantly more compensation if you entered into multiple agreements between those dates, and compensatory interest will also be added to your award.

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?

Given the regulator's commitment to publishing its final redress rules by the end of March 2026, we anticipate compensation payments will begin in mid-2026. The FCA's proposals indicate that consumers who have already brought a complaint before the redress scheme begins will receive any compensation due prior to lenders communicating with those who have not complained but have been identified as being within the redress scheme's scope.

Will my lender contact me if I am owed compensation?

Not necessarily. While the FCA proposed that lenders contact all their historical motor finance customers who entered into agreements between 6 April 2007 and 1 November 2024, the same February 2026 report that suggested the regulator is likely to make changes to some aspects of its proposals around tied agreements indicated that the final rules may also change the contact requirement so lenders are only obliged to get in touch with consumers who they believe are owed compensation.

Should this situation arise, it would further compound the existing verification risks associated with the redress scheme, as consumers who do not hear from their lenders would not know whether the lack of contact is because the lender no longer holds their records or correct contact details, or because they are not eligible for compensation.

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.

While the FCA’s proposed redress scheme means you will be able to bring a car finance mis-selling complaint yourself, and at no cost, 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, and whether you are eligible for a higher rate of compensatory interest on any redress that is due.

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.