Car Finance Scandal: Where Your PCP Claim Stands in October 2026

On 13 October the FCA confirmed the date that decides when, and whether, millions of car finance customers get paid. The Upper Tribunal will hear the legal challenges to its compensation scheme from 16 to 26 February 2027, with a judgment expected in the months after [1]. Here is where that leaves a PCP or hire purchase claim today.

Who challenged the scheme, and what is on hold?

Three lenders, Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance, brought challenges, as did Consumer Voice, represented by Courmacs Legal [1]. Parts of the scheme have been suspended since 2 July [2].

The practical effect is simple. Until the legal process concludes, lenders do not need to calculate or pay compensation [1]. They must keep preparing, and they must still tell complainants who are not owed anything [2].

What is the scheme supposed to pay?

As published in March, it covers motor finance taken out between 6 April 2007 and 1 November 2024. The FCA says 12.1 million agreements are eligible, the average payout is around £830, and total redress would be £7.5bn if three quarters of eligible consumers claim [3].

You are only owed money if you were not told clearly about one of three things [3]:

• a discretionary commission arrangement, where the dealer or broker set your interest rate to earn more commission;
• a high commission, at least 39% of the total cost of credit and 10% of the loan [3];
• a tied arrangement with one lender, unless the links between lender, manufacturer and dealer were visible, for example through a shared name.

Commission of £120 or less before April 2014, or £150 or less after it, is treated as fair, and so is an agreement that charged no interest [3].

How would a payout be worked out?

For most people, compensation is the average of two numbers: the commission paid, and an estimated loss worked out by recalculating the loan at a lower rate. For agreements from April 2014, that rate is the APR you paid multiplied by 0.83; earlier agreements use a 21% adjustment instead [4]. Interest is added at the Bank of England base rate plus 1%, with a 3% minimum in any year [3].

Here is a Caraxle calculation on an illustrative loan, using the rule as published and before compensatory interest:

Illustrative 2019 hire purchase loan	Amount
Borrowed over 48 months at 10% APR	£15,000
Monthly payment at 10% APR	£377.34
Monthly payment at the adjusted 8.3% APR	£366.19
Estimated loss, £11.15 a month for 48 months	£535.06
Discretionary commission paid to the dealer	£1,000.00
Compensation, the average of the two	£767.53

None of the caps bites in this example. Ninety per cent of the commission is £900, the cap based on the cheapest 5% of the market in 2019, a 3.90% APR, works out at £1,909.54 on this loan, and the interest actually paid was £3,112.38, so the £767.53 stands [4]. The FCA says caps apply in around 1 in 3 cases [3].

What happens to your claim while the scheme is on hold?

If you complained and you are not owed compensation, your lender should tell you by 18 November 2026 for agreements from April 2014, or by 18 January 2027 for older ones [2]. Not hearing anything does not mean you are owed money: some people will not be told until the case ends [1].

After the judgment there are two broad paths [2]:

1. The scheme is upheld and not appealed. The FCA expects payments to begin in 2027.
2. It is overturned in whole or in part. Lenders may be told to handle complaints individually, with an 8 week deadline and the Financial Ombudsman behind them, or a revised scheme could push compensation to 2028 or later.

What should you do now?

The FCA's own figure is the one to remember: a claims management company or law firm may keep up to 36% of anything you receive [1].

Finance is also one of the records a buyer cannot see for free. No government check shows it, as our guide to the free car check explains, and our comparison of paid checks sets out which ones include it.