Template complaint letter

The car finance scandal centres on the way many loans were sold between 2007 and 2024. In simple terms, millions of people were not told that car dealers and brokers could adjust interest rates to earn more commission; these were known as "discretionary commission arrangements." That meant customers often ended up paying more than they should have, without realising it.

The Financial Conduct Authority, or FCA, has now stepped in and confirmed that 12.1 million finance agreements could be eligible for compensation. That's a huge number, although it's worth noting that it doesn't necessarily mean 12.1 million people; some drivers had multiple agreements over the years. The regulator has designed a compensation scheme to address what it considers unfair treatment, and it estimates that around 75% of eligible consumers will actually make a claim. On average, payouts are expected to be about £830 per agreement, although some people could receive more depending on how much they were overcharged.

The starting point is quite simple: if you took out car finance, like a PCP or hire purchase agreement, between 2007 and 2024, there's a strong chance you could be eligible, but it depends on how that finance was arranged.

The issue the Financial Conduct Authority is focusing on is whether you were treated unfairly, particularly if the lender or broker used a commission model that wasn't properly explained to you.

If you believe you may be eligible, you can formally register your complaint by writing to your lender if you want a speedier process.

There is an implementation period, the scheme will start on 30 June 2026, for loans taken out from 1 April 2014 or 31 August 2026 for those agreed earlier, lenders have 3 months to reply to complaints and let them know whether they're owed compensation and how much. This means that people who have already complained or who complain before the end of the relevant implementation period will be compensated sooner.

However, lenders will write to eligible customers if they have not already complained, but they have 6 months from the implementation period, so it could take longer if you don't complain yourself. Anyone not contacted has until 31 August 2027 to make a claim if they believe they are eligible.

Even if your agreement has ended or you've already paid off the car, you can still be eligible, which is something many people don't realise. The key message is that eligibility isn't about how much you borrowed or what car you bought, it's about whether the finance was sold to you fairly. So if you had any kind of car finance in that period and you're unsure, it's worth checking, because you could be owed money and the process to find out is completely free.

The first thing you need to do is get in touch with the lender, you can search the FCA's list of lenders to find the relevant contact details, you will also be able to find a template complaint letter, email or a link to the lender's dedicated complaint form.

If you would like to use a template complaint letter -click here

Next, you will get a response from your lender. Your lender should send you an acknowledgement. If it doesn't, you should follow up to check if it has received your complaint. Your lender has 3 months to respond to your complaint, telling you if you are due compensation and how much.

If your agreement started between 6 April 2007 and 31 March 2014, and you complain before 31 August 2026, you should hear by 30 November 2026 at the latest. If your agreement started between 1 April 2014 and 1 November 2024 and you complained before 30 June 2026, you should hear by 30 September 2026 at the latest.

Then you will reply to the lender. You'll have 1 month to either accept or challenge the lender's response.