Many people assume that once they’ve finished paying for their car finance agreement, their opportunity to make a complaint has passed.
It’s an understandable assumption, of course. But it’s also a misconception. You can still pursue a car finance complaint even if you’ve paid off your agreement in full.
In fact, the Financial Conduct Authority (FCA) proposed motor finance redress scheme focuses on how your agreement was structured and sold to you. If it included hidden or otherwise unfair commission, you may be entitled to compensation once the scheme is implemented.
Here’s what you need to know.
Paying off your finance doesn’t prevent you from pursuing a claim
Whether your finance agreement is still active isn’t the deciding factor in whether it’s potentially eligible for compensation under the proposed FCA car finance scheme. Complaints relate to the way the finance agreement was arranged in the first place and whether commission was properly disclosed.
If you weren’t given all the information that you should have been before you signed the agreement (more on that below), you could still have grounds for a complaint after the agreement has ended. After all, the fact that you’ve completed your side of the deal doesn’t negate the fact that you may have been subjected to an unfair relationship or hidden fees from day one.
This means that even if you’ve made every payment, settled the agreement early or no longer own the vehicle, you may still be eligible to seek compensation.
What is hidden commission?
When arranging car finance, a lender may pay commission to the dealership or broker that introduced the agreement. That’s not a problem in itself; the issue is that many customers weren’t made aware that commission was being paid, or that the amount of commission influenced the interest rate they were offered.
If the dealer had a financial incentive to increase the cost of your finance without your knowledge, you may have been treated unfairly.
For example, many dealers or brokers increased interest rates on Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements. The higher the interest rate, the more commission the broker or dealer received from the lender. Known as discretionary commission arrangements (DCAs), this practice was banned by the FCA in 2021 – they found that it created a conflict of interest as customers were often unaware that the person arranging the finance could benefit financially from increasing the rate they paid.
What other factors could make you eligible to make a complaint?
There are other types of car finance arrangements that could lead to compensation claims.
If your broker or dealership was limited to certain lenders but you believed you were being offered a range of finance options, this could form the basis of a complaint. This is known as an undisclosed lender arrangement.
The FCA has also made clear that agreements with unfairly high fixed commission – 39% of the total cost of credit and more than 10% of the amount borrowed – are also a cause for concern.
Common reasons people think they can’t claim
It’s not just having paid off your agreement that makes people think they can’t complain, although this is perhaps the most common myth. There are several other misconceptions that stop people from making a car finance complaint directly or seeking legal advice about it. And in many cases, these concerns don’t automatically rule out a claim.
“I don’t own the car anymore.”
Whether you’ve sold the vehicle, traded it in or scrapped it, ownership of the car isn’t generally the issue. Complaints relate to the finance agreement itself, not what happened to the vehicle afterwards.
“It was years ago.”
Many people are surprised to learn that older agreements may still be worth investigating. The circumstances of your agreement and the relevant time limits will determine whether you can pursue a complaint, so it’s worth seeking advice before assuming it’s too late. The FCA’s proposed redress scheme for car finance commission arrangements covers agreements from 6 April 2007 to 1 November 2024.
“I can’t find the paperwork.”
Another reason people hesitate is because they’ve misplaced their finance agreement or other documents.
Of course, having the relevant paperwork is helpful. But it’s not always essential. In many cases, a solicitor can help identify the lender involved and advise what information may be needed to assess your circumstances.
If you remember roughly when you took out the finance, the dealership you used or the finance provider, that’s often enough to start enquiries.
How can you tell if you may have an eligible claim under the proposed FCA scheme?
There isn’t always an obvious sign that your agreement included hidden commission. Many customers only become aware of the issue after hearing about recent developments in the news.
If you purchased a vehicle using PCP, HP or another form of motor finance, it’s worth having your agreement reviewed if you believe you weren’t given clear information about how the finance was arranged or whether commission was involved.
Ultimately, every case is different. Eligibility depends on the specific circumstances of your agreement.
Why it might be worth seeking legal advice
The rules surrounding car finance compensation are complex and constantly evolving – so understanding whether you have a valid claim isn’t always straightforward.
You can, of course, complain directly to your lender. However, seeking legal advice can help you understand your options. It can also help establish whether your agreement may have been affected and explain what steps are available if you decide to proceed.
Importantly, asking for advice doesn’t commit you to making a claim. It simply allows you to make an informed decision based on your circumstances.
The current position on car finance compensation
As you might be aware, the FCA has partially suspended its car finance redress scheme while legal issues (raised by lenders and a consumer group) are considered by the Upper Tribunal, either in December 2026 or February 2027. However, the FCA has said it will defend the redress scheme ‘robustly’ and that it believes it would be the fairest and quickest way to provide compensation to eligible consumers, provided the legal issues are resolved.
This doesn’t mean that affected consumers have lost the right to make a complaint, seek legal advice or explore whether they may have a potential claim – so it’s still worth finding out where you stand.
Don’t assume you’ve missed your chance
If you’ve already paid off your car finance, it’s easy to think you’ve missed the opportunity to begin a compensation claim. However, that’s not necessarily the case if your agreement involved an undisclosed commission arrangement or was otherwise mis-sold.
If you’re unsure whether your agreement may be eligible, speaking to a solicitor can help you understand your position and whether you could potentially be entitled to compensation.
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