Car finance claims

A high value loan is one that was higher than 99.5% of other loans that year.

Loans above these thresholds for each year will be excluded from the scheme, unless it was a loan for a vehicle that was adapted for accessibility purposes.

Before 6 April 2008, agreements greater than £25,000 were unregulated and so won't be covered by this scheme.

If you had a high value loan, and have not complained, you won't be part of the compensation scheme and so won’t hear from your lender.  

But if you think you’ve been treated unfairly, you can still complain in the normal way to the lender or the broker. If you’re unhappy with the response, you can take your complaint to the Financial Ombudsman Service[9]. Find out more about how to complain[10]. 

The scheme covers agreements held by customers who have since passed away, so their beneficiaries may be able to claim.

If a lender becomes aware that a customer is deceased, we expect them to take reasonable steps to contact representatives or beneficiaries and ask whether they want to take part in the scheme.

You can also complain directly to the lender. Use your own details, but make clear that you are claiming on behalf of someone else. Include as much information as you can about the deceased person, such as their name, address and date of birth, along with any car finance details you know.

The lender is likely to ask for a copy of the will or the grant of probate, to make sure that any compensation is paid to the right person.

If your car finance claim has already been decided by a court, you won’t be able to have it considered again under the scheme.

If you’ve started legal action, but you’ve not yet been to court, your lender will be able to pause considering your case under the scheme until it hears what you would like to do. It will write to you to find out.

You can choose to pause or withdraw your legal case. If you choose to pause it, your lender will consider your case under the compensation scheme. It will let you know if you’re due any compensation and how much. If you accept any compensation, you’ll have to withdraw your legal case. Or you can reject the offer and continue with your case in court.

If you withdraw your legal case, you should make sure you understand what this could mean for the case.

In the most serious cases, people will get back all the commission paid, plus interest. This will only affect a small number of agreements.

For most people, compensation will be the average of what we estimate they have overpaid (the 'estimated loss’), and the commission paid, plus interest.  

The estimated loss will be based on a percentage discount of the interest rate they paid. This is 17% for cases from April 2014 and 21% for earlier agreements.  

Interest is added to compensate you for being deprived of money because of your lender's actions. It’s calculated at the annual average Bank of England base rate per year plus 1%, at a minimum of 3% in any year.  

In 1 in 3 cases, your final amount will be capped. That's because:  

• Almost everyone taking out car finance would have paid some interest.  
• Only the most serious cases of unfair treatment should get back 100% commission.

After working out your compensation, it will be checked against 3 limits:  

• 90% of the commission paid, plus interest.  
• The total cost of credit, adjusted to account for a minimal cost. Your lender will work out what you would have paid for credit if you'd been given a deal at the low end of the market. They then subtract that minimum cost from your original cost of credit. (The 'low end of the market' means an APR that was offered to only 5% of people at the time, excluding 0% APR deals).
• The actual total cost of credit, calculated on a simpler basis. This may be the lower figure if the adjusted cost of credit can't be accurately calculated. For example, if the lender doesn't have your payment schedule.

If your compensation is higher than any of these limits, it will be reduced to the lowest one.

If the interest rate you paid was in the lowest 5% offered at the time (excluding 0% APR deals), you won’t receive compensation. This is because your interest rate was already among the cheapest available.

If you are, or have been, bankrupt or are in an individual voluntary arrangement (IVA) or other formal insolvency proceedings, tell your lender. You should also tell your official receiver (for bankruptcy) or insolvency practitioner (for other insolvency proceedings).

This may affect who any compensation should be paid to.