The Short Answer
Based on the FCA's published statements and the current legal landscape, compensation payments are most likely to begin in late 2026 or early 2027. The exact timeline depends on the outcome of the FCA's formal consultation, the Supreme Court's ruling on commission disclosure, and how quickly lenders implement the required systems.
Full Timeline: What Has Happened So Far
What Is the Supreme Court Ruling About?
In addition to the FCA investigation, UK courts have been active in this area. In October 2024, the Court of Appeal ruled that lenders who paid undisclosed commissions to dealers were potentially in breach of their duty to customers. This ruling — if upheld by the Supreme Court — could significantly widen the scope of claims.
Specifically, the court suggested that customers may be entitled to the full commission paid to the dealer, not just the excess interest charged. This could result in substantially higher payouts than the FCA's baseline estimate.
The Supreme Court is expected to hear the case in 2025, with a judgment likely by late 2025 or early 2026. This will significantly influence how the FCA shapes its formal redress scheme.
How Does This Compare to PPI?
The car finance scandal has been widely compared to the Payment Protection Insurance (PPI) mis-selling scandal — the largest consumer redress exercise in UK banking history, which ultimately cost banks around £50 billion.
- Similarities: Undisclosed commission, widespread industry practice, FCA-mandated redress scheme, and large numbers of affected consumers.
- Key difference: PPI involved a single product (loan protection insurance) that was straightforward to quantify. Car finance involves variable interest rates calculated over many years, making the calculation more complex.
- Scale: The FCA's current estimate of £8.2 billion is far smaller than PPI. However, if the Supreme Court rules broadly, the total could grow significantly — potentially to £13 billion or more.
Will There Be a Deadline to Claim?
Under the FCA's proposed scheme, lenders will be required to proactively identify and contact customers who may be owed compensation. This means you may receive a letter from your lender once the scheme launches.
However, it is strongly advisable to register your interest now. There are several reasons for this:
- Customers who have already registered claims are likely to be processed first
- The FCA scheme may still require customers to actively confirm they wish to claim
- Limitation periods (time limits for legal claims) may apply in some circumstances — particularly if the scheme does not cover all cases automatically
- Claims companies have limited capacity as the scheme approaches peak activity
What Happens If My Lender Has Failed or Been Acquired?
If your original lender no longer exists as a standalone entity (for example, if it was absorbed into another bank), your claim still stands. You would direct the claim to the successor entity or, in cases of insolvency, to the Financial Services Compensation Scheme (FSCS).
What Should I Do Right Now?
- Register your details with an authorised claims specialist so your case is on record.
- Gather your documents — or let your claims specialist do this via a Subject Access Request to your lender.
- Keep an eye on news — particularly any Supreme Court judgment and FCA announcements in 2025/2026.
- Don't pay upfront fees — legitimate claims management companies work on a no-win, no-fee basis.