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Picture This
It’s 2016 and Emily, a young teacher from Manchester, is excitedly walking into a car dealership on one of her few weekends off. She’s ready to buy her first car—a matt black VW Golf that she’s had her eye on for months. Like millions of others, Emily doesn’t have the cash to pay for her new wheels upfront, and is relying on the dealership’s finance plan to help her out. The salesperson at the dealership is friendly and persuasive, assuring her that the finance agreement they’ve put together for her is “straightforward, with affordable monthly payments and no hidden fees.†Emily signs on the dotted line and drives away in her new Golf, ready to show it off to friends and family.
What Emily doesn’t know is that the finance plan she’s just agreed to includes a hefty (hidden) commission for the dealership—an important bit of information that was never mentioned to her during the sales pitch. This commission is now baked into her monthly payments, inflating the cost of the vehicle. Emily, like potentially millions of others in the UK, has just become a victim of what is now looking like one of the UK’s largest ever financial mis-selling scandals.
How did this all start?
For clarity, this short story about Emily is fictional (as you may have noticed from the AI generated images), but it paints a picture of a scenario that many drivers unknowingly encountered over the last decade and a half.
At the heart of this issue is something called “discretionary commission arrangements†(or DCA’s). These arrangements allowed dealerships to set their own interest rates on finance agreements, receiving higher commissions when customers paid more in interest. In many cases buyers were not not informed about these extra costs, which is why you’ll see the term “hidden commissions” plastered everywhere in 2025 as this scandal gains momentum. Simply put, many buyers paid over the odds for vehicles without knowing ‼ï¸
Below is a timeline of key events in the mis-sold car finance scandal so far:
January 2021
The Financial Conduct Authority (FCA) bans hidden commissions in the UK.
January 2024
The FCA launches an investigation into hidden commissions included in finance deals between 2007 and 2021.
February 2024
Lloyds Banking Group responds to the FCA’s investigation by setting aside £450 million for anticipated compensation payouts.
July 2024
The FCA continues its investigation and states that a compensation scheme for affected customers looks likely. Final investigation results are expected by the summer of 2025.
October 2024
A landmark ruling in the Court of Appeal declares it illegal for financial institutions to pay commissions to car dealers without the customer knowing.
January 2025
British finance minister Rachel Reeves attempts to limit the impact on the vehicle finance industry as it faces a potential multi-billion pound payout in 2025.
2025: A big year for claims?
As you can see from the timeline above, 2024 saw some key events in this scandal unfold. So what can we expect in 2025 when it comes to claiming for mis-sold car finance?
Well, the FCA continues to investigate how widespread these practices were and whether affected customers (like our fictional Emily) deserve compensation. If a formal decision is issued (which many in the industry think is likely), it could pave the way for the motor finance industry to pay back up to £30 billion in compensation.
How much can I claim?
According to the FCA, car buyers often paid around £1,100 more in interest on a typical £10,000 four-year finance deal due to hidden commissions, so the average claim looks likely to be around this amount (with interest added on for each year). Simply put, the bigger your finance deal, the more money you could get back.
However it’s also important to note that, as the FCA continues to investigate this scandal, there are a lot of unanswered questions. But in a nutshell – if you bought a car, motorbike, van, or camper van on finance between 2007 and 2024, then there’s a chance you might be owed a decent payout if things unfold as expected this year. The finance deals would either have been PCP (Personal Contract Purchase) or HP (Higher Purchase).
How do I know if I was mis-sold car finance?
If you believe you might have been mis-sold car finance due to hidden commissions, or you simply don’t know, there are two routes you can take:
💸 Claim via the experts: You can use a third party to approach your lender to find out if you had hidden commissions on your car finance. Restitute Money Reclaim can take on your claim in this way on a No Win, No Fee basis*. Our free historic car finance checker can locate agreements going back to 2007,
💸 Claim yourself You can contact your car dealership or finance provider directly to make a free claim. If your issue isn’t resolved via this route, you can escalate it to the Financial Ombudsman Service.
Whichever route you take, you could be owed thousands in compensation for mis-sold car finance. With 2025 looking like a pivotal year in this scandal, now might not be a bad time to get the ball rolling!
