Consumer Car Finance Reaches £42.8bn as New Car Demand Rises: What It Means for Historic Car Finance Claims

The latest rise in car finance lending may seem significant for anyone with an older PCP or Hire Purchase agreement, particularly while the FCA's motor finance compensation scheme remains partially suspended.

Figures from the Finance & Leasing Association showed that 187,304 new and used cars were financed through point of sale finance in June 2026, up 7% compared with June 2025, a trend also noted by Credit Connect. The value of those agreements reached £3.87 billion, while consumer car finance advances made by FLA members totalled £42.78 billion over the 12 months to June 2026, according to the FLA.

These figures reflected stronger activity in the current car finance market. They did not determine whether a historic agreement could fall within the FCA's compensation scheme. For agreements taken out between 6 April 2007 and 1 November 2024, the key issues remained the commission arrangements involved and what was disclosed when the finance was arranged. That distinction matters. A stronger market in 2026 did not change the circumstances of an agreement entered into years earlier.

In this blog

• What the latest car finance figures show
• Why a busier lending market doesn't affect the FCA compensation scheme
• Where the compensation scheme stands after its partial suspension
• What to do if you're concerned about a past agreement
• What it means if you're applying for finance now
• Key takeaways
• References

What the June 2026 car finance figures show

New car finance accounted for most of the growth in June. FLA members financed 70,614 new cars for consumers during the month. Both the number of cars financed and the value of advances were 21% higher than in June 2025, per the FLA's figures, a rise also flagged by Credit Connect. The value of new car finance advances reached £2.04 billion.

Across the first half of 2026, the number of new cars bought using consumer point of sale finance was 17% higher than during the same period in 2025. Used car finance was much flatter. Consumers financed 116,690 used cars in June, broadly unchanged from a year earlier. The value of those advances was £1.83 billion, up 1%.

Across the first six months of 2026, used car finance volumes were 2% lower than during the same period in 2025. The FLA has linked some of the strength in the new car market to increasing demand for electric vehicles. It says its members fund almost nine in ten private new car purchases and almost all private purchases of new battery electric vehicles.

What the £42.8bn figure actually means

The £42.78 billion figure needs some context. It refers to the value of consumer new and used car finance advances made through point of sale finance by FLA members during the 12 months to June 2026.

Over that period, 2,126,272 new and used cars were financed for consumers through FLA members. The number was 3% higher than during the previous 12 months. This is different from the FLA's wider motor finance measure, which also includes business activity. The FLA reported £5.19 billion in June alone.

Does a growing car finance market affect historic car finance claims?

No direct link exists between the latest lending figures and whether a historic agreement may qualify under the FCA's motor finance compensation scheme. The FLA figures measure current finance activity. The FCA scheme looks at certain motor finance agreements entered into between 6 April 2007 and 1 November 2024 where arrangements existed between a lender and broker in connection with commission.

An agreement does not qualify simply because commission existed or because it falls within those dates. Under the FCA's current rules, compensation may apply where the required conditions are met and the customer was not adequately told about certain arrangements.

These include a discretionary commission arrangement, where the broker could adjust the interest rate to increase its commission, certain high commission arrangements, and certain contractual ties between the lender and broker. The FCA currently defines high commission for these purposes as commission of at least 39% of the total cost of credit and at least 10% of the amount borrowed.

There are also exclusions and exceptions. For example, Personal Contract Hire is not covered by the scheme, and some low commission, interest free and high value agreements may fall outside it. The FCA estimates that around 37% of agreements made during the relevant period are eligible for compensation under its current rules. That represents around 12.1 million agreements.

Where the FCA motor finance compensation scheme stands now

The FCA introduced its Motor Finance Commission Consumer Redress Scheme on 30 March 2026.

The scheme has since been challenged in the Upper Tribunal by four parties: CA Auto Finance UK Limited, Consumer Voice Limited, Mercedes Benz Financial Services UK Limited and Volkswagen Financial Services UK Limited.

On 1 July 2026, the Upper Tribunal ordered a partial suspension of the scheme. This does not mean the entire scheme has been cancelled. While the legal proceedings continue, lenders do not currently have to calculate or pay compensation under the scheme or send communications telling consumers how much compensation they are due, the FCA has confirmed.

Firms must continue with parts of the scheme that have not been suspended. This includes identifying relevant complaints and agreements and gathering information about commission arrangements and disclosure. They must also respond to certain customers who are not due compensation under the scheme, subject to limited exceptions.

The Upper Tribunal is currently expected to hear the challenges either from 14 to 18 December 2026 or from 16 to 26 February 2027. The final hearing dates depend on how the case develops.

There is no confirmed date for compensation payments to restart. The FCA says that if the scheme is upheld and the judgment is not appealed, it expects payments under the scheme to begin in 2027.

What the partial suspension means for you

The partial suspension changes the timetable. It does not itself decide whether your individual agreement is eligible for compensation.

The outcome of the legal challenge could affect how the scheme operates, so it is important not to treat compensation as guaranteed.

You can still complain to your lender if you are concerned about a historic motor finance agreement. The FCA currently says complaining to your lender is the best thing to do if you have concerns.

You do not need to know the exact commission amount before raising a complaint.

You can also review your old finance records to establish which lenders and agreements were involved.

If you prefer support with identifying and reviewing your agreements, Mis-sold Expert can help you understand the information available and manage the claims process. Using a claims management company is optional and charges can apply if your claim succeeds.

Does strong demand for new cars mean the car finance issue is over?

No. The latest FLA figures describe current consumer borrowing and vehicle purchases. The FCA compensation scheme deals with historic conduct and specific commission arrangements.

One does not determine the other. A growing market today does not prove that an older agreement was fair or unfair.

Can I still complain while parts of the FCA scheme are suspended?

Yes. The FCA is still telling consumers with concerns to complain to their lender.

The partial suspension means lenders do not currently have to calculate or pay compensation to people who may be owed money under the scheme. They must still carry out specified preparation and complaint handling work.

Is every PCP or HP agreement from 2007 to 2024 eligible?

No. The date of your agreement is only one part of the assessment. The FCA scheme applies to qualifying motor finance agreements where the relevant conditions are met. Whether compensation is due depends on factors including the type of commission arrangement, what was disclosed, the amount of commission and other scheme rules and exclusions.

PCP agreements are a form of Hire Purchase and can fall within the scheme.

• HP car finance (Hire Purchase) is one of the simplest and most reliable ways to finance a car in the UK. With fixed monthly repayments and guaranteed ownership at the end of the agreement, HP car finance offers a clear and predictable route to owning your vehicle outright.
• PCP car finance is one of the most popular ways to finance a car in the UK, offering lower monthly payments, flexible end-of-term options, and access to newer, more reliable vehicles. Importantly, PCP car finance can still be an option for drivers with bad, poor, or low credit, depending on individual circumstances.

Personal Contract Hire agreements are not included.

When could compensation payments begin?

There is currently no confirmed restart date. The legal challenges are due to be heard in December 2026 or February 2027. The FCA says that if the scheme is upheld and the judgment is not appealed, it expects compensation payments to begin in 2027.

Any timetable remains dependent on the legal proceedings.

What should you do next?

If you had PCP, Hire Purchase or another qualifying motor finance agreement between 6 April 2007 and 1 November 2024 and you are concerned about how commission was handled, you can check your records and complain directly to your lender.

You can do this yourself without using a claims management company. If you prefer someone to help identify your previous agreements and manage the process, Mis-sold Expert can assist. Whether an agreement qualifies and whether compensation is payable will depend on the FCA scheme rules, the available evidence and the outcome of the ongoing legal challenge.

Mis-sold Expert is a trading name of M. R. Consumer Services Limited, we are a Claims Management Company authorised and regulated by the Financial Conduct Authority (FRN: 838452). A company registered in England & Wales, Company No: 07102609. We may handle your claim directly or refer it to our panel of solicitors. If referred, we may receive a commission, this does not affect the amount you receive.

You can claim without using a claims management company, to your finance provider and then to Financial Ombudsman Service (FOS), for free. The FCA has introduced a free consumer redress scheme.

***If you cancel outside the cooling off period cancellation charges may apply at a rate of £80+VAT, per hour. We charge a fee between 18-36% (including VAT) for a successful claim.

Key takeaways

• Consumer car finance lending hit £42.78bn in the year to June 2026, up 3% on cars financed, with new car finance up 21% year on year (FLA)
• This lending growth is a separate story from the FCA's motor finance compensation scheme, one doesn't affect the other
• The FCA's scheme, covering agreements from 6 April 2007 to 1 November 2024, was partially suspended by the Upper Tribunal on 1 July 2026 pending a legal challenge (FCA)
• Lenders don't currently have to calculate or pay compensation, but must still identify relevant complaints and gather commission data (FCA)
• Eligibility depends on several factors, including the type of commission arrangement and the scheme’s specific eligibility conditions. Disclosure may also be relevant, but it is not the sole test. The agreement date alone does not determine eligibility, and PCH leasing is not covered by the scheme.
• There's no confirmed date for compensation payments to resume, hearings are expected December 2026 or February 2027
• None of this changes how a new car finance application is assessed today

References

• Credit Connect, "Consumer car finance grows by 7%", covering the rise in consumer demand for point of sale car finance in June 2026: https://www.credit-connect.co.uk/news/consumer-lending/consumer-car-finance-grows-by-7/
• Finance & Leasing Association, "Motor Finance Statistics", including June 2026 figures showing that 187,304 new and used cars were financed for consumers during the month: https://fla.org.uk/research/motor-finance-statistics/
• Financial Conduct Authority, "Motor finance scheme partially suspended", covering the Upper Tribunal's July 2026 decision to partially suspend elements of the compensation scheme while legal challenges are considered: https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended