Millions of car finance scandal victims in the UK may struggle to claim compensation because they no longer possess essential loan paperwork. The Financial Conduct Authority (FCA) revealed a compensation scheme following findings that lenders illegally withheld crucial commission information from customers. Approximately 14.2 million cases are eligible for an average payout of £700, but a Money Mail investigation found that only a small fraction of affected individuals retain the necessary documentation for their claims.
The car loans in question date back as far as 2007, and most borrowers would have returned their vehicles and disposed of financial paperwork long ago, especially since the issue of undisclosed commissions only became apparent in recent years. Many loan agreements did not explicitly mention "commission," or buried such details in fine print, making it difficult for customers to have known they were overpaying through higher interest rates.
To file a complaint, individuals must target the lender, not the dealership or car manufacturer. However, identifying the correct lender can be challenging, particularly if the loan was arranged through the dealership, which may have used its own branding for finance. The FCA website offers guidance on checking old bank statements or contacting dealerships, but many independent dealerships have closed down, and former employees are often no longer available.
Even when customers do have paperwork, lenders frequently require specific agreement numbers, which are often missing from older documents. While the FCA is providing a template complaint letter, the process of obtaining a payout remains uncertain, with lenders often citing the lack of original paperwork as a reason for inaction.
The FCA estimates that about 44% of the 32.5 million motor finance agreements sold between 2007 and 2024 were unfair. While lenders are expected to proactively contact some customers, this is not a guaranteed route to compensation. The compensation scheme is set to launch in late 2026, with lenders expected to contact those who have already complained within three months and others within six months of the scheme's start.
Lenders are also given the opportunity to rebut claims in certain circumstances, such as providing evidence of adequate disclosure or demonstrating that the consumer was sophisticated enough to understand commission structures. The complexity of contracts and the lack of transparency regarding commission amounts and contractual ties between dealerships and le... download the app to read more
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