The Financial Conduct Authority (FCA) has concluded its review of historical commission arrangements between car finance providers and dealerships, revealing that millions of car buyers in the UK may be entitled to compensation. The FCA's review found that incentives for dealerships to sell finance products may have led to customers receiving unsuitable or unaffordable deals, potentially resulting in losses for those who were pushed into finance deals they didn't need or couldn't afford.

The compensation scheme aims to address potential mis-selling that occurred between January 26, 2007, and December 22, 2020. The FCA estimates that up to 11 million affected customers could be eligible for redress, with a total potential compensation bill estimated to be between £1.5 billion and £2.5 billion. The core issue revolves around discretionary commission models, where dealerships received bonuses based on the sale of finance products, creating a conflict of interest that may have prioritized the dealership's financial gain over the customer's best interests.

The FCA is now working to establish a compensation scheme that is fair, efficient, and accessible to all eligible customers. Details on how customers can claim compensation are still being finalized, but the FCA anticipates a process will be launched in early 2024. Information will be made available on the FCA's website and through other channels. Customers who believe they may have been affected are advised to gather any relevant documentation, such as their finance agreement and correspondence with the lender or dealership. While the FCA is working on a streamlined compensation process, it's possible that customers may need to submit claims directly to their finance provider. The FCA's findings do not automatically entitle customers to compensation; each claim will be assessed on its individual merits.