Mis-sold HP Finance: You May Be Owed Compensation
Hire Purchase (HP) agreements are one of the most straightforward ways to finance a car — but that doesn’t mean they’re always sold fairly. If any commission involved in your agreement was unfair, you could be entitled to compensation.
At Elmwood Law, we make it easy to check whether your HP agreement was mis-sold. And if it was, we’ll guide you through a simple, fully online claims process.
How It Works
1. Submit your claim online
Answer a few simple questions. It only takes minutes.
2. We verify your details automatically
Our system securely checks your information in real time.
3. We handle the legal side
Our legal team builds your case and manages all communication.
4. You receive your compensation
If your claim is successful, we’ll ensure your compensation is processed promptly.
What Is a Hire Purchase (HP) Agreement?
With an HP agreement, you pay a deposit and then make fixed monthly payments. Once the final payment is made, the car is yours. It’s a clear and popular form of finance, but only when it’s sold properly.
Many agreements may have involved a Discretionary Commission Arrangement (DCA), allowing the dealer to receive a higher commission by inflating the interest rate. This unfair practice has since been banned due to the conflict of interest it created and its detrimental impact on consumers. You may also be eligible for compensation if your agreement included a non-discretionary commission, as long as the fees are deemed too excessive.
Why It Matters
A Hire Purchase agreement is a legally binding contract, and you have the right to full, honest information before signing. If you weren’t told the full story, you may have been mis-sold.
This issue has received growing attention from regulators, with the FCA (Financial Conduct Authority) calling out poor practices across the car finance industry. For many drivers, it meant overpaying as a result of excessive commission payments, often without their knowledge.
A Mass Redress Scheme Has Been Confirmed
The Financial Conduct Authority (FCA) confirmed the details of its anticipated redress scheme in March 2026, following an extensive consultation process. Under this scheme, 12.1 million agreements are eligible for compensation, with firms expected to pay out around £7.5 billion.
Eligible consumers include those who weren’t told about a discretionary commission arrangement (DCA), a high commission arrangement, or contractual ties that give a lender exclusivity or a right of first refusal. The FCA estimates that the average redress per agreement will be £829.
This scheme is now the subject of four legal challenges, affecting the initial timeframes and delaying any possible compensation. The FCA has stated that it promises to defend the scheme. The case is unlikely to be heard before October 2026. Firms have been told to continue preparing for the scheme as usual, but potential payouts are now unlikely until the end of 2026 at the earliest.
Please be advised that you do need to use a law firm to access this redress scheme. However, there are advantages of instructing a law firm to do so, including reducing the time and hassle of filing paperwork or communicating with your lender.
How Elmwood Law Can Help
We specialise in mis-sold car finance claims — and we do it differently. Our process is fully online, simple to follow, and designed to take the pressure off you.
- No confusing forms.
- No waiting on phone calls.
- No legal jargon.
We combine smart technology with real legal expertise to handle the heavy lifting, so you can get on with life while we take care of your claim.
Frequently Asked Questions
What do I need to do to start my claim?
Getting started takes just two minutes. Our user-friendly online system makes registering a quick and simple process. Just provide a few details about yourself and how you purchased your vehicle. If you’re eligible, you will be able to proceed and begin your compensation claim.
Can I submit a claim by myself?
You can submit your complaint directly to your lender at no cost, without needing a solicitor. If the issue isn’t resolved, you can escalate it to the Financial Ombudsman Service for free – but only after raising it with the provider first.
The FCA has confirmed a consumer redress scheme. Under this scheme, you do not need to register a complaint to be eligible for or receive compensation. You also do not need to use a claims management company or a law firm to access the scheme.
That said, there are advantages to letting us handle your claim. We communicate with the lender on your behalf, working diligently to secure fair compensation. If your provider has difficulty locating your account or information, we’ll assist and help move things forward smoothly. Once you’ve signed up with us, we’ll manage the entire process and keep you informed with regular email updates, giving you peace of mind from start to finish.
When will I receive the compensation?
Under the mass redress scheme, the FCA expected consumers to start receiving compensation in 2026, with an implementation period announced. However, multiple parties have since launched a legal challenge against the scheme. The case is unlikely to be heard before October 2026. Therefore, compensation is now not expected until the end of 2026 at the earliest.
Can I claim for more than one car?
If you’ve taken out HP finance on multiple vehicles, you may be eligible to claim for each. Start by using our online eligibility checker.
What information do I need to see if I can claim?
To check if you qualify for a compensation claim, simply provide your vehicle registration or the name of your lender, along with a few personal details – that’s all we need. From there, we’ll handle the rest for you.
Can I claim even if I've fully paid off my finance?
Yes, you can still make a compensation claim regardless of whether your car finance is ongoing or already paid off. If the agreement was mis-sold, you’re entitled to compensation.
