Smart Car Finance Mis-Selling - FCA Investigation

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Smart Car Finance Mis-Selling - FCA Investigation

Last updated: 26 February 2026

Smart cars, known for their compact design and affordability, were commonly sold on Personal Contract Purchase (PCP) and Hire Purchase (HP) finance agreements from 6 April 2007 to 1 November 2024. During this period, many consumers opted for these financing options when purchasing Smart vehicles, often through popular lenders such as Black Horse, Barclays Partner Finance, Close Brothers Motor Finance, MotoNovo Finance, and Santander Consumer Finance.

How Smart Cars Were Financed

Smart car buyers during the investigation period frequently financed their purchases using PCP or HP agreements. These plans allowed consumers to make lower monthly payments by agreeing to a balloon payment at the end of the agreement. Common lenders for Smart cars included Black Horse, Barclays Partner Finance, Close Brothers Motor Finance, MotoNovo Finance, and Santander Consumer Finance. PCP agreements typically featured a fixed deposit contribution, followed by regular monthly payments over a term of 12 to 60 months, with an optional final payment at the end.

The FCA Motor Finance Investigation

In its investigation into motor finance sales practices during the period from 6 April 2007 to 1 November 2024, the Financial Conduct Authority (FCA) uncovered significant issues related to discretionary commission arrangements. These arrangements were often opaque and could have led to mis-selling of finance agreements. The FCA estimated that 12.1 million eligible agreements (FCA, March 2026) by these practices (FCA estimate), with a total value of £7.5 billion (FCA estimate). On average, each affected agreement was worth about £829 (FCA estimate).

How to Check Your Agreement These may include unusual payment structures or arrangements where you were offered additional products and services that seemed overly aggressive or unnecessary. The key dates to consider are from 6 April 2007 to 1 November 2024.

How to Complain Directly to Your Lender for Free

If you suspect your Smart car finance agreement might have been affected by the issues identified in the FCA investigation, it is important to know that you can complain directly to your lender for free. Common lenders like Black Horse, Barclays Partner Finance, Close Brothers Motor Finance, MotoNovo Finance, and Santander Consumer Finance all have customer service departments dedicated to handling complaints. You do not need a claims management company; reaching out to your lender directly is the first step in addressing any concerns about mis-selling.

Sources and References

Financial Conduct Authority (FCA). "Estimate of Motor Finance Agreements." 2024.
Financial Ombudsman Service (FOS). "Guidance on Handling Motor Finance Complaints." 2023.
FCA Compensation: FCA Scheme Figures

The FCA confirmed on 30 March 2026 that 12.1 million motor finance agreements are covered by the FCA redress scheme. The FCA-estimated scheme average of £829 per eligible agreement per agreement, with a total of £7.5 billion set aside for consumers. The scheme covers PCP and HP agreements entered into between 6 April 2007 and 1 November 2024.

Two separate schemes apply: post-2014 agreements (implement by 30 June 2026) and pre-2014 agreements (implement by 31 August 2026). The final deadline to complain is 31 August 2027. You can complain to your lender directly for free. You do not need a claims management company.

Smart MOT Pass Rate - 2024 Data

Across 12,046 MOT tests in 2024, Smart vehicles have an overall pass rate of 80.1%. This is close to the national average of 79.6%. DVSA data covers 45 Smart models with sufficient test volume.

Overall pass rate: 80.1%
Total MOT tests (2024): 12,046
Models with data: 45
National average: 79.6%

Best Smart models for MOT pass rate

Smart Fortwo Passion Mhd Auto: 80.3% pass rate (2,336 tests)
Smart Fortwo Pulse Mhd Auto: 80.3% pass rate (502 tests)
Smart Roadster 80 Auto(Rhd): 76.2% pass rate (823 tests)
Smart City Passion 61 Auto: 72.9% pass rate (575 tests)

Smart MOT Reliability Trend (2022-2024)

Smart has been getting more reliable, improving from 78.1% in 2022 to 80.1% in 2024 (+2.0 percentage points).

2022: 78.1% pass rate (13,983 tests)
2023: 78.9% pass rate (14,347 tests)
2024: 80.1% pass rate (12,046 tests)

Based on 40,376 MOT tests across three years (DVSA open data).

Data source: DVSA anonymised MOT test results 2024, Open Government Licence v3.0.

Frequently Asked Questions

What are some common issues related to Smart car motor finance mis-selling?

Common issues include high-pressure sales tactics, incomplete or misleading information about the terms and conditions of financing, and failing to inform customers adequately about their rights or alternatives available. Mis-selling can also involve inappropriate loan-to-value ratios for the vehicle's value (FCA estimate).

How many people have been affected by motor finance mis-selling involving Smart cars?

Between 6 April 2007 and 1 November 2024, around 5 million people in the UK were estimated to be impacted by motor finance mis-selling across all car brands (FCA estimate). While this figure is for all makes of vehicles, it includes potential cases involving Smart cars.

What should I do if I suspect my Smart car was sold with mis-sold motor finance?

If you believe your Smart car financing arrangement has been mis-sold to you, first review the terms and conditions of your agreement carefully. You can complain directly to your lender for free without needing a claims management company.

What is the average compensation amount awarded in motor finance mis-selling cases involving Smart cars?

The Financial Conduct Authority (FCA) has estimated that the total value of compensation paid out across all motor finance mis-selling cases amounts to £7.5 billion (FCA, March 2026) as of November 1, 2024. The average amount per claim is around £829 (FCA estimate). This includes potential claims involving Smart cars.

Important: MLJ.org.uk is an independent information resource. We are not a claims management company, solicitor, law firm, or financial adviser. We do not process claims, take fees, or provide advice. Where the law gives you a right to complain or claim directly (to a lender, council, FOS, court, or regulator), you can do so without paying a third party. MLJ.org.uk is operated by Copious Ltd, registered in England and Wales, company number 11437826.