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Millions of drivers could get on average £830 each after a £7.5bn package to reimburse those caught up in the car finance scandal was agreed.
Brits who bought a car since 2007 were victims of unfair car loan deals, which saw dealers receive hidden commissions, with some paying more than is fair for their loan.
The UK finance watchdog, the Financial Conduct Authority (FCA), has now finalised their redress scheme for affected drivers.
The scale of the practice was uncovered after three drivers took their cases to court, but only one of the cases was upheld in the Supreme Court, which was feared to limit how many drivers could get compensation.
On Monday, the FCA said that 12.1 million agreements made between 2007 and 2024 are now eligible for compensation.
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This is fewer than previous pitches but the average payout has increased to around £830 per agreement. A minimum 3% compensatory interest rate per annum has also been added.
Payouts will be capped in around 1 in 3 cases to ensure no one is put in a better position than had they been treated fairly.
The FCA estimates that 75% of eligible consumers will make a claim. If so, total redress paid would be £7.5bn.
Nikhil Rathi, chief executive of the FCA, said: ‘We’ve listened to feedback to make sure the scheme is fair for consumers and proportionate for firms. It will put £7.5 billion back into people’s pockets.
‘Now we need everyone to get behind it and ensure millions get their money this year. Payouts should not be delayed any longer, especially as household bills come under greater pressure.
‘Delivering compensation promptly also gives lenders the chance to rebuild trust, and means we can draw a line under the past and support a healthy motor finance market for the future.’
How can you make a claim?
If you think you might have been given an unfair car deal, the first step is to submit a complaint to the lender you used.
The FCA provides a template that people can download here.
If you are unsure who provided the deal, the information might be in old bank statements or contact the dealer where you bought the car to ask.
The provider should send you an acknowledgement within eight weeks after the complaint. Lenders don’t have to send a final response until after December 4, 2025.
Making a claim is free, and people do not need to use a claims management company or a law firm to get compensation.