If you bought a car using finance in Northern Ireland between 6 April 2007 and 1 November 2024, you may be able to claim compensation if the finance agreement involved undisclosed or unfair commission arrangements.
The issue is part of a wider UK motor finance scandal involving millions of agreements, but is eligible for motorists in Northern Ireland too. The Financial Conduct Authority (FCA) estimates that around 12.1 million car finance agreements could be eligible for compensation.
What is the car finance mis-selling scandal?
The scandal centres on the way car dealers and finance companies handled commission payments.
In some cases, dealers could receive more commission by arranging finance at a higher interest rate. This type of arrangement was known as a discretionary commission arrangement, or DCA.
Customers were not always told that the dealer could influence the interest rate or that the dealer could receive more commission as a result.
Courts have since found that firms failed to provide customers with important information about some commission arrangements. The FCA has introduced a compensation scheme for consumers who were treated unfairly.
Does the compensation scheme apply in Northern Ireland?
Yes, the FCA’s motor finance redress scheme covers eligible agreements across the UK, including Northern Ireland.
The scheme generally covers car, van and motorbike finance taken out between 6 April 2007 and 1 November 2024 – and is for personal use only, it does not cover cars purchased for self employed, business or sole traders.
It can include hire purchase and Personal Contract Purchase agreements, provided the agreement meets the other eligibility requirements.
The FCA estimates that 37% of agreements from the relevant period could qualify for compensation.
Which car finance agreements could qualify?
Having had car finance during the relevant period does not automatically mean you are entitled to compensation.
Your agreement may qualify if the lender or broker failed to properly disclose certain commission arrangements and you were treated unfairly as a result.
This can include the broker receiving discretionary commission arrangements, certain high-commission arrangements and some situations where a broker had a financial relationship or tie with a particular lender.
There are also exclusions. For example, some high-value loans and certain business agreements may fall outside the scheme.
How much compensation could you receive from mis-sold PCP finance?
The FCA estimates that consumers who qualify will receive an average of around £830 per agreement (Source: Claim Smart). Some claims will be worth more, while others will be worth less.
In the most serious cases, the rules can result in repayment of the commission plus interest. For most customers, however, compensation will be calculated using a formula designed to estimate the financial loss caused by the arrangement.
It is therefore important not to assume that every successful claim will result in the same payment.
Can you make a PCP claim if you have already paid off the car?
Yes, paying off the finance or selling the vehicle does not automatically prevent you from making a complaint.
The key issue is whether the finance agreement falls within the relevant period and meets the other conditions of the compensation scheme.
If you no longer have your paperwork, you may still be able to find details through old bank statements, your credit file or by contacting the dealer or lender.
Can you make a PCP claim if you live in Northern Ireland?
Living in Northern Ireland does not prevent you from making a claim where the finance agreement is covered by the FCA scheme.
The complaint should normally be made to the finance company that provided the agreement. If you are unhappy with the lender’s decision, you may be able to take the complaint to the Financial Ombudsman Service.
The Ombudsman is a free service, meaning consumers do not need to pay a claims company simply to have their complaint considered.
When will mis-sold car finance compensation be paid?
The FCA’s compensation scheme has faced legal challenges, and parts of the scheme have been suspended while the Upper Tribunal considers the cases.
The legal challenges are expected to be heard in either December 2026 or February 2027. Until the legal process is resolved, lenders do not have to calculate or pay compensation under the suspended parts of the scheme.
If the scheme survives the legal challenge, the FCA expects payments to begin in 2027.
Should you make a claim now?
If you believe you may have been affected, contacting your lender is the sensible first step.
You do not need to pay a claims management company to complain. The FCA’s scheme is designed to be free for consumers.
With millions of agreements potentially affected, the car finance scandal could become one of the UK’s largest consumer compensation exercises. For motorists in Northern Ireland, checking an old finance agreement could therefore be worthwhile, particularly if the dealer arranged the finance and commission was not clearly explained.
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