If you’ve had a car on finance in recent years, you may have seen talk about compensation schemes linked to mis-sold agreements. While an official redress process is being developed, some claims firms argue that consumers could potentially be entitled to more than what’s currently expected.
What’s happening with motor finance claims?
Following a ruling by the UK Supreme Court, the financial regulator, the Financial Conduct Authority (FCA), is setting up a redress scheme for drivers who may have been affected by issues such as undisclosed commission payments on car finance deals.
The FCA has estimated that average payouts under this scheme could be around £829 per finance agreement.
However, not everyone agrees that this reflects the full picture.
Claims firms say some customers may be owed more
One law firm, Barings Law, which represents tens of thousands of motorists across the UK, says some consumers may be missing out on additional compensation routes.
The firm argues that in some cases, people may also be able to bring separate claims if they were given loans that were unaffordable at the time they were approved.
According to Barings Law, these “affordability claims” are different from the FCA’s redress scheme and could potentially lead to significantly higher payouts.
The firm says it has seen average settlements of around £4,800 in these types of cases, with some reaching over £22,000.
The key difference: commissions vs affordability
Most of the attention so far has focused on undisclosed commissions—where lenders or brokers may not have clearly told customers how they were being paid.
But Barings Law argues there is another layer: whether the loan itself was suitable in the first place.
Their view is that some borrowers may have been approved for finance they could not realistically afford, which may have caused long-term financial strain.
Concerns raised by the regulator
The Financial Conduct Authority has also raised concerns about how some claims management companies (CMCs) and law firms are operating in this space.
It has reported issues such as unwanted marketing messages, misleading adverts, and cases where consumers may not have fully understood they were signing up for legal claims—sometimes after clicking on “free compensation checkers” online.
To help consumers, the FCA has even published template complaint letters for those who feel they were misled or signed up without clear consent.
Delays in compensation payouts
There is also uncertainty about when compensation will actually be paid.
The FCA originally expected payouts to begin sooner, but legal challenges from both lenders and claims representatives have slowed the process. In recent correspondence with Parliament, FCA chief executive Nikhil Rathi warned that payments may now not begin until 2027.
What this means for consumers
At the moment, there are still two parallel conversations happening:
- The official FCA scheme, expected to provide standardised compensation for certain motor finance issues
- Separate legal claims, which some firms argue could result in higher payouts in specific cases
The key message from claims firms is that consumers should understand all possible options before settling on one route.
However, regulators are also urging caution, warning that not all marketing or claims approaches are clear or in consumers’ best interests.
If you would like to speak to us or obtain further information, then please call 0870 766 9997, or email info@boxlegal.co.uk.
