British expats who took out UK car finance between 2007 and 2024 may be eligible for compensation due to undisclosed commission arrangements. This guide explains who may qualify, including people living abroad and estates, how the FCA’s proposed redress scheme works, what steps can be taken now, and the possible tax implications of any compensation received
If you are a British expat who took out vehicle finance in the UK between 6 April 2007 and 1 November 2024, you may be eligible for compensation, even if you no longer live in the UK and even if the agreement ended many years ago.
The UK financial regulator, the Financial Conduct Authority (FCA), is finalising proposals for an industry-wide redress scheme following widespread concerns about how commission was used and disclosed in vehicle finance agreements.
The FCA estimates that around 14.2 million agreements, approximately 44% of all relevant agreements made since 2007, may ultimately fall within scope, depending on the final rules adopted.
This article guide explains:
Between 6 April 2007 and 1 November 2024, many cars, vans and motorbikes in the UK were purchased using finance such as Hire Purchase (HP) or Personal Contract Purchase (PCP).
In a significant number of cases:
In some arrangements, known as Discretionary Commission Arrangements (DCAs), dealers could earn more commission by increasing the interest rate paid by the customer, creating a potential conflict of interest. The FCA banned DCAs in January 2021, but many agreements made before that date may still be affected.
Following Court of Appeal judgments and ongoing legal scrutiny, the FCA has said that failures to properly disclose commission arrangements may have resulted in unfair relationships under UK consumer credit law. The regulator is consulting on a Motor Finance Consumer Redress Scheme intended to address this on an industry-wide basis.
You may fall within scope if:
The agreement does not need to be active. Settled, refinanced or long-finished agreements may still be considered.
Under the proposed scheme, consumers may qualify for compensation if they were not informed about details of at least one of the following arrangements between the lender and the broker:
Yes.
Eligibility is based on where and how the finance agreement was made, not on where you live today.
If you arranged UK vehicle finance while resident in the UK, you can still complain and receive any compensation while living overseas, whether in Europe, the Middle East or elsewhere.
You do not need to return to the UK. Complaints and correspondence can normally be handled by email, phone or post.
No. Some agreements are likely to fall outside the scope.
More likely to be included:
More likely to be excluded:
If you are unsure what type of agreement you had, it is usually still worth checking, particularly if the dealer arranged the finance on your behalf.
Rights relating to motor finance complaints do not automatically end if a customer passes away or loses mental capacity.
If a person has died and had a potentially eligible motor finance agreement:
Complaints can also be made on behalf of living customers who lack capacity, for example due to dementia, serious illness or cognitive impairment.
In these cases, a complaint may usually be made by:
Lenders will normally ask for evidence of authority, such as a registered LPA or deputyship order.
Any compensation paid belongs to the customer themselves and must be managed in accordance with the legal authority held.
The FCA has confirmed that consumers do not need to wait for the final scheme to complain. Complaints submitted in advance will generally be assessed under the scheme once it is in force.
For expats and older agreements, there are additional practical reasons for raising a complaint sooner rather than later:
The FCA expects to announce in February or March 2026 whether it will proceed with the redress scheme. If final rules are published, the scheme would launch shortly afterwards, with the current pause on motor finance complaints lifting on 31 May 2026. Compensation payments would then be expected later in 2026.
Compensation, where due, will depend on factors such as:
The FCA has estimated an average outcome of around £700 per agreement, though many consumers may receive more or less, and some may receive nothing.
Compensation is expected to include interest, typically calculated at the average base rate per year plus 1%, from the date of any overpayment to the date compensation is paid.
There are no guaranteed outcomes.
You do not need to use a third party to complain. The FCA is clear that consumers can complain for free and do not need to use a claims management company to establish eligibility.
Many expats and families will be comfortable handling a single, straightforward agreement themselves.
In more complex situations, such as multiple historic agreements, limited documentation, estates or capacity issues, some people prefer to seek specialist assistance.
If professional help is used, it is important to understand the fees involved and the alternatives available.
Where a consumer chooses to use a specialist to handle a motor finance commission complaint on their behalf, fees are usually charged on a no win, no fee basis.
This means:
Fees are normally calculated as a percentage of the compensation actually received, rather than a fixed cost. The percentage charged can vary significantly between providers.
Typical features to be aware of include:
Before proceeding, consumers should always be provided with:
This allows an informed comparison between handling the complaint independently at no cost, and delegating the process in exchange for a share of any compensation recovered.
Whether tax is payable on any motor finance compensation will depend on how the compensation is categorised and on the individual’s tax residence and personal circumstances.
There is no single answer that applies to everyone.
In general terms:
If a person is not UK tax resident at the time the compensation is paid, UK tax is not usually withheld automatically. However, UK tax rules may still be relevant depending on the nature of the payment.
Lenders typically do not deduct UK tax at source from compensation payments, but they may provide a breakdown showing how much of the payment relates to interest.
For British expats, the tax treatment will usually depend on:
Some countries may treat the interest element as taxable income, while others may treat compensation receipts differently or apply thresholds or exemptions.
Double tax agreements may also be relevant in certain cases, particularly where interest income is involved.
For UK residents, no specific tax action will be required, particularly where compensation mainly represents a refund of overpaid charges and the amounts involved are modest.
However, seeking tax advice may be sensible where:
In these situations, a brief discussion with a tax adviser familiar with cross-border or local tax rules can help confirm whether any reporting or payment is required.
This is usually something to consider after the compensation breakdown is known, rather than before making a complaint.
Be aware: if you choose to use a claims management company (CMC), you may end up paying for a service you don’t need. Fees can be as high as 36% of any compensation received (including VAT), significantly reducing the amount you ultimately keep.
In circumstances where you do prefer professional support, Experts for Expats can introduce you to a vetted, FCA-authorised specialist who:
There is no obligation to use a service at all. The self-help route remains entirely valid, and many people choose to handle complaints independently. The right approach depends on time, complexity and personal preference.
If you would like help checking whether an agreement may be in scope, or simply want to talk through the options we offer a free introduction service where you can book a no obligation discovery call with our trusted partner.
