Can You Claim for Car Finance Before 2007?

If you’re looking into a car finance claim, you may have seen references to 2007. You might be wondering why some firms focus on agreements taken out after that year.

The reason comes down to regulation and who had authority over lenders at the time.

What Changed in 2007?

On 6 April 2007, the Financial Services Authority, now the Financial Conduct Authority, took over regulation of consumer credit. This included most car finance agreements such as Personal Contract Purchase and Hire Purchase.

Before that date, car finance was regulated under a different system by the Office of Fair Trading. The rules were not the same. Complaint handling and access to the Financial Ombudsman Service were also different.

If your agreement started after April 2007, it is likely covered by FCA complaint rules. That means you can complain directly to the lender. If you are not satisfied with their response, you can usually take your complaint to the Financial Ombudsman Service.

If your agreement started before April 2007, your options may be more limited.

Does This Mean You Cannot Claim at All?

Not necessarily. It depends on your individual agreement.

If your car finance agreement was taken out before April 2007, the lender may not have been regulated by the FCA in the same way. That can affect whether the Financial Ombudsman has the power to review your complaint.

However, some agreements that continued beyond April 2007, or were refinanced or varied after that date, may still fall within the Ombudsman’s jurisdiction.

Each case depends on:

The exact start date of the agreement
Whether the agreement was amended or refinanced
The identity of the lender
Whether the lender was authorised at the relevant time

A proper review of your agreement is needed before reaching a conclusion.

Why Do Most Car Finance Claims Focus on 2008 Onwards?

You may notice that many discussions about mis-sold car finance refer to agreements taken out between 2008 and 2021.

This is largely linked to discretionary commission arrangements.

What Is a Discretionary Commission Arrangement?

In some cases, lenders allowed dealers or brokers to adjust the interest rate offered to you. The higher the interest rate, the more commission the dealer could earn.

This created a potential conflict of interest. If you were not told clearly that the dealer could increase your interest rate to earn more commission, you may have grounds to complain.

The FCA banned discretionary commission models in January 2021.

Agreements taken out before 2007 are less likely to fall within the same regulatory framework, particularly where the lender was not under FCA supervision at the time.

What About Time Limits?

Even if your agreement was taken out after 2007, time limits apply.

You normally need to complain within:

Six years from the date of the agreement
Three years from the date you became aware, or could reasonably have become aware, that there may have been an issue

The Financial Ombudsman applies these rules. Lenders may also rely on limitation rules if a matter proceeds to court.

If you have only recently learned about discretionary commission arrangements or potential non-disclosure, the three-year awareness rule may be relevant.

Due to the recent developments with the FCA and car finance claims, a lot of people are finding out for the first time that there may have been an issue with their agreement. The new scheme being proposed by the FCA will hopefully address this issue. For claims which fall outside of the proposed redress scheme, it is important to keep note of key timings to do with your claim.

What Should You Do If Your Agreement Was Before 2007?

Start by gathering information:

A copy of your finance agreement
Any settlement letters or account statements
The name of the dealer and lender
The agreement start date

You can contact the lender to request information, even if the agreement is old. They may still review your complaint internally.

If the Ombudsman does not have jurisdiction, the lender may still choose to consider the matter. However, there is no automatic right to external review for agreements outside FCA regulation.

Understanding Your Car Finance Agreement

The 2007 date matters because it marks the point when car finance came under FCA regulation. That affects complaint rights and access to the Financial Ombudsman Service.

It does not automatically mean you cannot raise a concern. It means your options depend on when your agreement started and who regulated the lender at the time.

Mis-Sold Expert helps you understand whether your agreement falls within the relevant regulatory framework and what steps are available to you.

You can claim without using a claims management company; you can go to your finance provider and then to FOS, for free. Additionally, the FCA is introducing a free consumer redress scheme.