Millions of UK citizens may be entitled to a higher compensation payout of £830 following a recent development in the car finance mis-selling scandal. Despite this increased amount, legal experts at HD Law have raised concerns about whether affected drivers are receiving the full amount owed to them as the compensation process progresses.
Based on HD Law’s past cases, individuals might potentially receive more than double the £830 sum suggested by the Financial Conduct Authority (FCA) for those impacted by the mis-selling of car finance agreements between 2007 and 2024. The FCA recently announced that compensation is anticipated to be distributed for over 12 million mis-sold car finance agreements during the specified period.
While the FCA initially projected a higher number of affected consumers, the average payout per agreement has now risen to approximately £830. The FCA estimates that 75% of eligible individuals will submit claims, potentially resulting in a total redress payout of £7.5 billion. However, the new £830 figure does not fully reflect the potential compensation that individuals could be entitled to if they pursue legal action.
If you purchased a vehicle on PCP or Hire Purchase between 2007 and 2024, you might be among the millions eligible for compensation. HD Law aims to secure a complete refund of the commission paid, and through legal review, payouts could be significantly higher. As a result, HD Law clients currently receive an average of £1,846.23 per financed vehicle, with potential for increased claims for those with multiple car finance agreements during the specified timeframe.
Individuals are encouraged not to wait for lenders to reach out, as addresses may not be up to date. By using HD Law’s free eligibility tool, you can check if you are entitled to compensation within a minute by providing your postcode and relevant details. Kevin Durkin, Director of HD Law, expressed dissatisfaction with the FCA’s redress scheme, suggesting it falls short of providing fair compensation for consumers affected by mis-selling practices.
If you suspect you were a victim of car finance mis-selling, the FCA is proposing a free redress scheme expected to launch in 2026. While participation in the scheme is voluntary, individuals retain the option to pursue legal recourse independently. The FCA website offers resources and guidance for affected individuals, outlining steps to follow once the redress scheme is operational.
Affected consumers should note that the mis-sold agreements must have been for Personal Contract Purchase or Hire Purchase, excluding leased vehicles, and intended for personal use. Those owed compensation were subject to discretionary commission arrangements that resulted in higher interest rates for customers, a practice banned by the FCA in 2021.
Additionally, lenders will have a specified period to inform complainants about potential compensation owed, with earlier complaints likely resulting in quicker resolutions. As the process unfolds, individuals are advised to stay informed and consider their options for seeking fair compensation under the revised redress scheme.
