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My Car Finance Claim Was Rejected — What Happens Next?

Scheme status (updated 5 August 2026): parts of the FCA motor finance redress scheme are temporarily suspended while the Upper Tribunal considers legal challenges. Lenders do not currently have to calculate or pay compensation under the scheme, the original decision and payment dates no longer apply, and no payment under the scheme is guaranteed. If the scheme proceeds, first payments are expected in 2027 at the earliest. Any dates mentioned below were set before the suspension.

A rejection from your lender is not the end of your car finance claim. It is often just the beginning. The Financial Ombudsman Service (FOS) independently reviews rejected complaints and regularly overturns lender decisions — including car finance claims involving hidden commission. Here is exactly what to do if your claim has been rejected.

In this guide

Why Lenders Reject Car Finance Claims

Lenders reject car finance claims for a range of reasons, most of which can be challenged. The most common rejection reasons are:

  • The lender says you were told about the commission — but disclosure must meet specific FCA standards to be valid
  • The lender says the commission did not influence the interest rate — the Supreme Court ruling in October 2024 confirmed this is rarely a valid defence for discretionary commission arrangements
  • The lender says your claim is out of time — time limits are more generous than lenders suggest and the FOS applies its own rules
  • The lender says the FCA redress scheme makes your complaint premature — this is only relevant to Scheme 1 lenders and does not prevent FOS escalation for most claims
  • The lender disputes that a commission was paid at all — this can be checked via a Subject Access Request
  • The lender says you were not affected financially — this argument has been significantly weakened by the Supreme Court ruling

The Most Important Thing to Know

A rejection letter from your lender is not a final decision. It is your lender’s opinion of your claim. The Financial Ombudsman Service forms its own independent view — and it frequently disagrees with lenders.

In the period leading up to the FCA’s PS26/3 review, the FOS was upholding a significant proportion of car finance commission complaints that lenders had previously rejected. A rejection from Black Horse, Close Brothers, Santander or any other lender does not mean your claim has no merit.

What Is the Financial Ombudsman Service?

The Financial Ombudsman Service is an independent body set up by Parliament to resolve disputes between consumers and financial businesses. It is free to use, its decisions are binding on lenders, and it applies its own standards when assessing whether a complaint has merit — not the lender’s standards.

The FOS has jurisdiction over car finance commission complaints and has been actively investigating these cases. If the FOS upholds your complaint, the lender must pay the compensation the FOS directs — it cannot simply refuse.

The Six Month Rule — Act Now

You have six months from the date of your lender’s final response letter to refer your complaint to the Financial Ombudsman Service. This is a hard deadline. If you miss it, the FOS may refuse to investigate even if your complaint has merit.

Check the date on your rejection letter now. If it is approaching six months, escalating to the FOS immediately is the single most important action you can take.

The FOS deadline is separate from and unaffected by the FCA’s June 30 2026 scheme deadline. Even if you miss the FCA scheme deadline, you may still be able to escalate a rejected complaint to the FOS provided you are within six months of your lender’s final response.

How to Escalate to the Financial Ombudsman Service

  • Step 1: Locate your lender’s final response letter — this is the letter formally rejecting your complaint. The six month FOS deadline runs from the date on this letter
  • Step 2: Go to financial-ombudsman.org.uk and complete the online complaint form — it takes approximately 20 minutes
  • Step 3: Upload your lender’s final response letter and any supporting documents including your original finance agreement if you have it
  • Step 4: The FOS will acknowledge your complaint and allocate it to an investigator
  • Step 5: The investigator will contact both you and the lender, review the evidence and form a provisional view
  • Step 6: If the FOS investigator finds in your favour, the lender is given the opportunity to settle — many do at this stage without a formal FOS decision
  • Step 7: If the lender does not settle, the FOS issues a formal decision which is binding on the lender if you accept it

What the FOS Looks For in Car Finance Cases

The FOS applies its own assessment criteria when reviewing car finance commission complaints. The key questions it considers are:

  • Was a commission paid by the lender to the dealer or broker who arranged your finance?
  • Was that commission disclosed to you in a way that was fair, clear and not misleading?
  • Did the existence of the commission create a conflict of interest that affected the rate you were offered?
  • Were you placed in a worse financial position as a result of the undisclosed commission arrangement?

Following the Supreme Court’s ruling in October 2024 in Johnson v FirstRand and the related cases, the legal position on discretionary commission arrangements hardened significantly against lenders. The FOS takes this ruling into account when assessing complaints.

What If the FCA Redress Scheme Covers My Lender?

Some lenders are participating in the FCA’s PS26/3 redress scheme. If your lender is a Scheme 1 participant, the FCA has asked the FOS to pause certain complaints to allow the scheme to operate. However:

  • A pause is not a rejection — your complaint remains live
  • The FOS pause applies to specific scheme participants only — not all lenders
  • If your lender is not a scheme participant, the FOS can investigate your complaint now
  • The June 30 2026 deadline applies to the FCA scheme — FOS escalation has its own separate six month deadline from your lender’s final response letter

If you are unsure whether your lender is a scheme participant or whether your complaint has been paused or rejected, Claims Bible can clarify your position.

Common Questions After a Rejection

My lender said the commission was disclosed in the finance agreement. Is that a valid rejection?

Not necessarily. For disclosure to be legally sufficient it must have been clear, prominent and meaningful — not buried in small print or described in vague terms. Many finance agreements contained disclosure that the FOS has found fell short of the required standard. A rejection on disclosure grounds is one of the most commonly overturned by the FOS.

My lender said I cannot claim because I knew about commission generally. Is that right?

No. General awareness that commissions exist in the finance industry is not the same as informed consent to a specific undisclosed commission arrangement on your particular agreement. The Supreme Court was clear that the standard required is specific, meaningful disclosure — not general industry knowledge.

My lender said the claim is out of time. Can the FOS still investigate?

Possibly yes. The FOS applies its own time limit rules which can differ from the lender’s assessment. The FOS generally has jurisdiction if you complain within six years of the event giving rise to the complaint, or three years from when you became aware — or should have become aware — that you had grounds to complain. The widespread publicity around the car finance commission scandal from 2023 onwards is relevant to when the three year period started. Claims Bible can advise on your specific dates.

My lender has gone into administration. Can I still escalate?

If your lender has entered administration, the FOS route may still be available depending on the circumstances, and the Financial Services Compensation Scheme (FSCS) may also be relevant. See our guide on claiming when your lender has gone bust for specific guidance.

How long does an FOS investigation take?

FOS car finance cases are currently taking between 12 and 24 months to reach a final decision due to the volume of complaints. However, many cases settle before a formal decision is issued — particularly where the FOS investigator issues a provisional view in favour of the claimant. Claims Bible monitors your case throughout the process.

What compensation can I expect if the FOS upholds my complaint?

The FOS typically directs lenders to pay the difference between the interest rate you were charged and the rate you would have been offered without the commission arrangement, plus 8% statutory interest calculated from the date of each payment. In some cases the FOS also awards compensation for distress and inconvenience. Average payouts across upheld car finance commission cases have been in the range of £500 to £1,600 for typical agreements, with higher payouts on larger or longer-term finance agreements.

What If I Have Already Accepted a Settlement?

If you accepted a settlement offer from your lender following your initial complaint, you may have waived your right to further FOS escalation depending on the wording of the settlement agreement. However if the settlement was accepted under the FCA redress scheme, specific rules apply to what rights are preserved. Claims Bible can review any settlement documentation you have received and advise whether further action is possible.

Do Not Wait — The Six Month Clock Is Running

Every day that passes after receiving a rejection letter reduces your options. The six month FOS deadline is strict and the FOS has very limited discretion to accept late complaints. If you received a rejection letter and have not yet escalated, check the date on the letter today and act immediately if you are approaching the deadline.

What Happens After I Submit My Claim?

The June 30 2026 Deadline Explained

FCA Redress Scheme vs Going to Court

Lender Gone Bust — Can I Still Claim?

Back to Car Finance Claims Hub

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Think You May Have a Motor Finance Claim?

The FCA estimates average compensation of around £830 per eligible agreement, but eligibility and payment amounts vary. Some customers may receive nothing. Complaints about agreements started from 1 April 2014 should be submitted by 30 June 2026 to be considered under the earlier timetable. Different dates apply to older agreements. The scheme is currently subject to legal challenge, so dates and payment timings may change.

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Gavin Cooper

Gavin Cooper

Claims Expert, Claims Bible

Gavin writes and reviews Claims Bible's guidance on compensation claims. Claims Bible is a trading style of Forces Compare Ltd, authorised and regulated by the FCA for claims management activities (FRN 785329).

Updated 8 August 2026 · Part of our Car Finance guide