Using a claims firm for a car finance commission claim

If a claims firm has been in touch about commission on your car finance, the first thing to know is that you do not need one. Complaining about hidden commission in a car finance agreement is free to do yourself, and the FCA has committed to an "easy to participate in" redress scheme¹. A claims management company or law firm may charge you and could take as much as 30% of any compensation payout¹. The FCA's own warning is blunter: if you use one, you could lose over 30% of any money you get².

The scheme itself is the FCA's car finance compensation scheme, launched to compensate eligible car finance customers who may have been treated unfairly³. Around 12.1 million car finance agreements will be due compensation because they failed to disclose certain information¹. The FCA has said the average payout will be £700, and Which? reports the average payout is expected to be just over £800¹.

Parts of the scheme have been suspended following a legal challenge, which may delay complaint outcomes and compensation payments³. That makes it more important, not less, to understand what a claims firm is actually selling you, and what you can do for nothing.

You don't need a claims firm: the FCA scheme is free

The single most useful fact about this market is that the official route costs nothing. It is free to complain, and the FCA has committed to an "easy to participate in" redress scheme¹. The Motor Finance Consumer Redress Scheme consultation is explicit that communications from lenders and the FCA must make clear to consumers that the FCA scheme is free to access⁶.

The same principle runs through the wider compensation system. Claiming with the FSCS is 100% free, and there is zero advantage in using a separate claims management company⁴. The FSCS says plainly that it is completely free to claim with it⁷. National Debtline's guidance on claims management companies is equally direct: you don't need to use a claims management company to make a complaint, and it's free to do it yourself⁸.

That does not make claims firms illegal or useless to everyone. Some people value having the paperwork handled, particularly where an agreement is old or the lender has changed hands. But the reader should understand what is being bought. The FSCS notes that whether you take your claim to a claims management company or come straight to it, you will have to provide the same information⁹. In other words, the evidence gathering falls on you either way.

If you are unsure who your car finance was with, the FCA publishes a list of lenders that had commission arrangements, which is a free starting point before paying anyone³.

What a claims firm charges: often over 30% of your payout

Fees are where the difference between the two routes shows up. A claims management company or law firm may charge you and could take as much as 30% of any compensation payout¹. The FCA's press release on the scheme warns that using one could mean losing over 30% of any money you get².

Other guidance puts the range higher. Resolver's guidance on loan complaints states that a CMC will charge you a fee, which is often between 30% and 40%¹⁰. Business Debtline says that if a claims management company is successful in raising a complaint or making a claim for compensation on your behalf, it will usually take its fee from the compensation you are awarded¹¹.

A claims management company or law firm may charge you and could take as much as 30% of any compensation payout, and the FCA warns that consumers using one could lose over 30% of any money they get¹. Fee ranges reported for claims management companies are often between 30% and 40%, and where a company is successful it will usually take its fee from the compensation you are awarded¹⁰. Those are illustrations of how the charge works, not predictions of your payout, which depends on your agreement.

Who the compensation scheme covers and what it pays

The FCA has launched a scheme to compensate eligible car finance customers who may have been treated unfairly³. The Financial Ombudsman Service describes the underlying complaints as covering certain motor finance agreements⁵. Which? sets out the eligibility test in consumer terms: you are covered by the FCA compensation scheme if you were not clearly told that your dealer or broker could set a higher interest rate just to earn a bigger commission⁴.

The scheme also covers agreements held by consumers who have since passed away, and their beneficiaries may be able to claim¹². That matters for families dealing with an estate, who may not realise a claim exists.

On what it pays, the FCA has said the average payout will be £700, and Which? reports the average payout is expected to be just over £800¹. The two figures come from different documents and are not reconciled; treat both as averages, not entitlements. Your own figure depends on your agreement, the commission charged and how the scheme rules treat it.

The FSCS, which handles failed firms rather than commission complaints, pays either 90% or 100% of the claim value if policyholders have valid claims under an insurance policy with a failed insurer¹³. That is a different scheme with different rules, and it is worth keeping the two apart when a claims firm talks about "compensation".

How to claim yourself, step by step

The direct route is short. The Financial Ombudsman Service's own guidance on commission complaints is to explain to your lender what you're unhappy about, and the reasons why; if you're not happy with their response, you can bring the complaint to the Ombudsman with as much information as possible¹⁴.

1. Find out who your lender is. The FCA publishes a list of lenders that had commission arrangements³.
2. Complain to the lender directly, in writing, setting out why you were not clearly told the dealer or broker could set a higher interest rate to earn a bigger commission⁴.
3. Keep a copy of everything you send and note the date.
4. If you are not happy with the response, take it to the free Financial Ombudsman Service¹⁴.
5. If the lender has failed, the Financial Services Compensation Scheme may be the right route instead⁷.

The FSCS says that in most circumstances customers won't need to make a claim, because it works with the failed firm, the FCA and the insolvency practitioner¹⁵. Where a claim is needed, the information required is the same whether you go through a claims management company or come straight to the scheme⁹.

Scheme deadlines if you haven't complained yet

Timing is the part most people get wrong, and it is where a claims firm can add pressure that the rules do not justify.

If you have not complained, the FCA advises that you will be contacted by the lender within six months of the scheme starting¹. Anyone not contacted has until 31 August 2027 to make a claim². The Consumer Council makes the same point for concerned consumers who are not contacted: they can still complain to their firm by 31 August 2027¹². Which? reports that if you're not contacted during this time, you have until 31 August 2027 to make a claim under the current plan¹⁶.

Separately, the scheme rules provide that complaints received after the end of the implementation period and before the end of a period of 17 months beginning with the scheme effective date must be treated as complaints received before the end of the implementation period, with communications sent within 3 months of receipt¹⁷.

Legal challenges and the partial suspension of the scheme

The scheme is not running smoothly. After launching, the FCA's scheme was legally challenged, and parts of it have been suspended³. The Upper Tribunal has suspended parts of the scheme². The FCA confirmed it had received legal challenges against its compensation scheme for car finance from Consumer Voice and others, with four new legal challenges by three lenders and a consumer group reported in May 2026¹⁶.

The practical effect is delay. Tandem, a motor finance provider, tells customers that parts of the scheme are currently subject to legal challenge, which may delay complaint outcomes and compensation payments¹⁸. The same wording appears across its motor finance pages¹⁸. The House of Commons Library briefing records that the FCA has launched a redress scheme for borrowers¹⁹.

If you have already signed up with a claims firm

If you have already signed an agreement, the position is not lost, but it is more complicated. The firm will usually take its fee from the compensation you are awarded if it is successful¹¹. You can still complain to the Financial Ombudsman Service if you are unhappy with the service you have received from a claims company, for example the results of your claim or the fees they have charged you²⁰.

You can also complain about a claims company through the government's complaints route²¹. And if you want to end the agreement, remember the fee warning: ending it after the initial cooling off period and before any redress has been agreed may trigger a charge, and the FCA fee cap will not apply¹¹.

If you choose to use a claims management company for this type of complaint, it should fully explain the temporary complaint handling rules and make sure its advertising is not misleading¹¹. If it did not, that is itself something to raise.

Where to get free help

Free, impartial help exists and costs nothing. The Financial Ombudsman Service is free to consumers, and consumers can still go to court if they don't want to accept the Ombudsman's decision¹⁴. The FSCS is free to claim with⁷. National Debtline and Business Debtline both publish free guidance on claims management companies⁸.

If money is tight while you wait, discussing your options with your lender won't have any impact on your credit file²². For anyone weighing up whether to pay a firm, the arithmetic is simple: the same complaint, the same information, and a cut of between 30% and 40% taken from the result¹⁰.