How to reclaim your mis-sold car finance commission

The Financial Conduct Authority (FCA) has launched a new car finance compensation scheme. It’s designed to repay discretionary commission arrangements that were built into drivers’ finance agreements but not clearly explained on their paperwork.

Much like the PPI scandal of the previous decade, loads of companies have sprung out of the weeds offering to reclaim this money on your behalf. The trouble is, they’ll keep some of it as payment if your claim is successful. So, our Deputy Editor decided to find out how difficult it is to claim the money back yourself – and keep all of it.

Scroll down for his guide. He’s chasing down compensation on his family’s 2014 Abarth 500 – and he’ll show you all the pitfalls he encounters along the way.

Step one: make sure you’re eligible

To be eligible for this redress scheme, you need to have taken out a personal contract purchase (PCP) or hire purchase (HP) finance agreement between 6 April 2007 and January 2021. The vehicle must also be for personal use – business agreements are far trickier to reclaim compensation on.

We financed our Abarth in 2014, which means we’re eligible to throw our claim into the investigation. I should also flag that it doesn’t matter if, like in our case, you’ve paid the finance off. You can still apply for compensation if you now own the vehicle outright.

Step two: find out who to complain to

Don’t allow a third-party company to handle your complaint. Go directly to the finance provider you paid each month during your agreement. Take note – this will probably have a different trading name to the dealership you bought the car from.

For example, my family signed our finance agreement at an Arnold Clark dealership, but the finance was fulfilled by FGA Capital UK Limited. It was here I encountered my first pitfall, as it took some research to learn this firm later became FCA Automotive, which is the company I needed to send my complaint.

Remember, you should always look for the finance provider, as it’s the company that received the unfair discretionary commission arrangement from your pocket.

Step three: gather data

Scour your finance paperwork and pull everything you can out of it. In addition to the name of the finance provider, note down your policy number, the registration number of the car, the address the finance was registered to, the name and address of the dealership you bought the car from and the date you accepted the finance.

It’s also a good idea to get an overview of the money involved. Note down the deposit you paid, the cost of your monthly payments, the number of payments you made, the total cost of the agreement and the price of the balloon payment at the end of term.

These figures aren’t required at this point in your claim, but it’s a good idea to familiarise yourself with them while you’ve got the paperwork to hand.

Step four: complain

Drafting a letter to reclaim your mis-sold car finance can be a quite daunting if you’re not fluent in legalese. Thankfully, Martin Lewis has an excellent free tool on his website that’ll do most of the work for you. Simply fill in the details the website requires from the previous step and let the tool do the rest of the work.

The letter the tool produces is designed to do two things. First, it determines whether your car finance agreement included a discretionary commission arrangement. If it did, the letter will also get your claim into the queue.

Most importantly, the tool provides the correct email address to send your claim to, which will save you an hour of trawling through the finance company’s website to find the details.

Step five: wait for a response

You’ll probably receive two emails from the finance provider. Complaints departments are currently overrun with enquiries, so the first response you receive might be an email to confirm your case is waiting to be dealt with.

The following email will be more important as it’ll confirm or deny whether your finance agreement included a discretionary commission arrangement, therefore confirming or denying whether you’re eligible for compensation under this scheme.

If the finance company confirms your agreement included a discretionary commission arrangement (DCA), it’ll log your complaint and you simply need to wait for the compensation to arrive. The FCA expects the first payments will be made in 2026 – but there are a long list of cases to chew through, so don’t get disheartened if the money doesn’t land in your account in time for the New Year.

If the response you receive states your agreement didn’t include a DCA, you won’t be able to claim under this scheme. I’m still waiting for a response to my initial email.

What this means for you

I spent a morning collecting the information required to fill out my family’s claim – and because I used an online tool to write my letter for me, I had it submitted before lunch. That means there’s no need to use a third-party company. It’s an incredibly easy process.

Now, I just need to wait to learn what the outcome of my claim will be. I’ll update you with any developments I receive – especially if the finance provider tries to slow down proceedings. Stay tuned for more information.

Luke Wilkinson – Deputy Editor, Parkers

For all the latest advice, news and finance deals, sign up to the Parkers newsletter here.