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You can make an affordability complaint about car finance if your lender failed to check you could reasonably afford the agreement, or sold it to you unfairly. The best first move is to complain directly to your lender now, with dates, sums and evidence to hand, and escalate to the Financial Ombudsman if you are turned down. The FCA’s redress scheme covers agreements from 2007 to 2024, but you do not need to wait for it to act.
TL;DR:
- Lenders are required to conduct proportionate affordability checks based on your actual financial circumstances, not just the risk profile of the loan.
- Contemporaneous bank statements, pay slips, and credit reports from the time of the agreement carry the most weight in disputes.
- Winning complaints generally results in interest refunds, interest rate recalculations using 17% or 21% APR adjustments, and possible compensation at a minimum of 3%.
- You can escalate rejected complaints to the Financial Ombudsman, which assesses what a reasonable affordability check would have shown using your evidence.
- Most individuals can draft their own complaint using templates, but managed claims processes are available if paperwork is lost or you prefer professional handling.
Before you write anything, work out exactly what you are complaining about. Check whether your agreement was Hire Purchase (HP) or Personal Contract Purchase (PCP), note the lender’s name (it may differ from the dealer or broker you dealt with), and find your original paperwork or statement of account. If you cannot locate any of this, a free agreement check can trace it for you in under 60 seconds using only your name and date of birth, without needing your car registration or old lender paperwork.
Once you have the basics, follow these steps:
Your complaint letter should include:
If drafting feels daunting, a complaint letter template can help you structure the wording and avoid missing key details.
It is worth complaining now even though the FCA’s redress scheme has faced a legal challenge that has delayed parts of its rollout. Your individual complaint right exists separately from the scheme, and getting your complaint logged early means you are in the queue regardless of how the wider timetable unfolds.
A complaint backed by documents carries far more weight than one based on memory alone. Gather the following before you write to your lender:
Bank statements are often the most persuasive evidence you can supply. Look for a regular income pattern, essential spending such as rent, utilities and food, and any transfers, overdraft use or short-term borrowing that shows you were stretching to cover costs. If you had to juggle priority bills around the car payment, say so explicitly rather than assuming the statement speaks for itself.
Go back as far as you reasonably can, ideally covering the months immediately before and after the agreement started. Before sending anything, redact details you do not need to share, such as unrelated account numbers or transactions involving other people.
If you are missing paperwork because the agreement is old or the lender has changed name, our free check finds your car finance agreements in under 60 seconds, without needing your registration plate or any lender documents, which can save considerable time before you even start drafting your complaint.
Pro Tip: Highlight any month where the car payment caused you to miss or delay another bill. Specific examples like this are often more persuasive than general statements about financial pressure.
Lenders are required to carry out checks that are “reasonable and proportionate” to the size and risk of the loan, under the Financial Conduct Authority’s consumer credit rules. This is often called a borrower-focused approach: the check has to consider whether the specific customer could sustainably afford the repayments, not just whether the loan looked low-risk on paper.
In practice, the strength of the check depends on the circumstances:
When a complaint reaches the Financial Ombudsman Service, it does not simply ask whether the lender followed a checklist. It reconstructs what a proportionate check would likely have shown, using the evidence the complainant provides. Published final decisions, such as Decision Reference DRN-6002865, show the Ombudsman weighing bank statements, credit file data and the lender’s own records to decide whether the loan should have been approved at all.
A recurring pattern in these decisions is that declared income alone rarely settles the question. Where a complainant’s bank statements show regular overdraft use, existing high-cost credit, or repeated shortfalls around payday, the Ombudsman has tended to find the checks performed were not proportionate to what a closer look would have revealed. This is why contemporaneous bank evidence from the time of the agreement, rather than your current financial position, tends to carry the most weight.
Winning an affordability complaint does not usually mean a blank cheque. Outcomes tend to follow a fairly predictable pattern, and the FCA’s redress scheme sets out specific calculation methods for agreements it covers.
Common outcomes include:
The FCA has said millions of motor finance customers could receive payouts under the scheme announced this year, though parts of it remain subject to legal challenge and some elements have been suspended, which affects how quickly any individual payout arrives.
If you still have the car and win your complaint, you will not usually get to keep the vehicle for free. A fair usage charge is commonly applied to reflect the benefit you had from driving the car, and the loan balance is typically recalculated rather than wiped out entirely. There is also a practical risk: if you stop paying while a complaint is ongoing, the lender can still pursue repossession, so continuing payments is usually the safer path while you wait for a decision.
As a simplified illustration, say your finance balance is £8,000 and the Ombudsman finds a 17% APR adjustment applies. The recalculation might reduce your remaining interest charges by a few hundred pounds and add 3% compensatory interest on the refunded amount, rather than clearing the loan outright.
If your lender turns you down, or eight weeks pass with no final response, you can take your case further.
You do not need a claims management company or a solicitor to complain. Most people can write to their lender and refer to the Ombudsman themselves, free of charge, using FCA guidance and template letters designed for exactly this purpose.
That said, some people prefer a hands-off route, particularly if they cannot locate their old agreement or do not have time to chase paperwork and correspondence.
Before signing with any claims firm, ask about the fee structure, what happens if the claim is unsuccessful, and whether they or a partner law firm would handle court proceedings if needed. Treat vague answers to these questions as a red flag.
Our own free check finds your car finance agreements in under 60 seconds, and eligible claims are then handled through a managed process with a partner law firm, which suits people who want their agreement traced and their case progressed without doing the legwork themselves.
Pro Tip: Never sign up with more than one claims firm for the same agreement. It can create conflicts over who represents you and delay your payout.
The single biggest lever in these complaints is contemporaneous bank evidence, not a polished letter. Show what your finances actually looked like at the time, including why you kept paying even when it was a struggle, rather than just asserting the loan was unaffordable.
Avoid signing with multiple claims firms for the same agreement, and keep a written log of every call, letter and reply. Complain to your lender now. Escalation routes to the Ombudsman exist whatever happens with the wider FCA scheme timetable.
— Jake
If chasing old paperwork feels like the hardest part of this process, we built a faster way in. Our free check finds your car finance agreements in under 60 seconds, using just your basic details, with no car registration or lender documents required.
From there, eligible cases move into a managed claims process handled through our partner law firm, so you are not left drafting letters or tracking deadlines alone.
Start your free check and see what we find on your agreements today.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
Write to your lender with the agreement date, monthly payment and evidence showing the loan strained your finances, such as bank statements or payslips from that period. Ask for a refund, recalculation and credit file correction, and escalate to the Financial Ombudsman if the lender rejects your complaint or does not respond within eight weeks.
Affordability is instead assessed under the FCA’s borrower-focused approach, which looks at your actual income, essential spending and overall financial position rather than a fixed percentage.
Send a written complaint to your lender setting out why the agreement was unaffordable, backed by bank statements, payslips or benefit letters from the time. If you are unhappy with the response, or none arrives within eight weeks, you can refer the matter to the Financial Ombudsman Service free of charge.
Contact your lender as early as possible to discuss a payment plan, since most lenders would rather agree reduced payments than pursue repossession. If the original agreement itself was unaffordable from the start, you may also have grounds for an affordability complaint, so gather your financial records from that period before you contact them.
No, you can complain to your lender and refer to the Financial Ombudsman yourself at no cost. Some people choose a managed service instead, such as our free check and partner law firm process, because it saves time tracing old agreements and handling correspondence.
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