The Financial Conduct Authority has
confirmed its motor finance redress scheme on 30 March 2026. The scheme covers 12.1 million car finance agreements taken out between 6 April 2007 and 1 November 2024 where lenders failed to disclose commission arrangements to borrowers. Firms are expected to pay around £7.5 billion in compensation, with an FCA-estimated scheme average of £829 per eligible agreement per agreement. The total cost to firms, including administration, is estimated at £9.1 billion.
At a Glance: FCA Car Finance Compensation Scheme
- Status: Confirmed by the FCA on 30 March 2026. Not yet operational - lenders are implementing it now
- Who's eligible: Anyone with a PCP or HP car finance agreement between 6 April 2007 and 1 November 2024 where commission was not properly disclosed
- How many affected: 12.1 million agreements across the UK
- Average payout: £829 per agreement (FCA estimate at 75% uptake)
- Total cost: £9.1 billion to lenders (£7.5 billion in compensation + £1.6 billion administration)
- Deadline for post-2014 agreements: Lenders must implement by 30 June 2026
- Deadline for pre-2014 agreements: Lenders must implement by 31 August 2026
- When you'll hear: If already complained, within 3 months of the deadline. If not, lenders have 6 months to contact you
- What to do now: Complain to your lender directly for free. You do not need a claims management company
- Final deadline to complain: 31 August 2027
This is the largest consumer redress scheme in UK financial services history. It follows the Supreme Court's ruling that lenders broke the law by failing to disclose important information about commission paid to car dealers and brokers.
Am I Eligible? Quick Check
the FCA-estimated scheme average is £829 per eligible agreement. if ALL of these apply:
1. You took out
PCP or HP finance on a car, van, motorbike, or campervan
2. The agreement was between
6 April 2007 and 1 November 2024
3. A broker (usually the car dealer) arranged the finance
4. The broker received commission from the lender that was
not properly disclosed to you
You are
not eligible if: your agreement had 0% APR, the commission was under £120 (pre-2014) or £150 (post-2014), or you arranged finance directly with the lender without a broker.
If you're unsure, it costs nothing to check.
Contact your lender and ask them to review your agreement under the FCA redress scheme.
Who Is Eligible for Car Finance Compensation?
Consumers who took out a personal contract purchase (PCP) or hire purchase (HP) agreement on a car, van, motorbike, or campervan between 6 April 2007 and 1 November 2024 may be eligible. The FCA has confirmed three types of arrangement that trigger compensation:
1.
Discretionary commission arrangements (DCAs) -where the broker could adjust the interest rate upwards to earn higher commission, meaning borrowers paid more than they should have.
2.
High commission arrangements -where commission was at least 39% of the total cost of credit and 10% of the loan amount.
3.
Contractual ties -where a lender had exclusivity or right of first refusal with a dealer, unless the lender can prove visible links with the manufacturer and dealer.
Agreements where commission was £120 or less (pre-April 2014) or £150 or less (from April 2014) are excluded, as these amounts are unlikely to have influenced the broker's behaviour. Agreements with 0% APR are also excluded.
The FCA has narrowed eligibility from 12.1 million agreements at consultation stage to 12.1 million, after tightening the criteria for what counts as unfair treatment.
How Much Compensation Will People Receive?
The FCA-estimated scheme average of £829 per eligible agreement per agreement at 75% estimated uptake. Individual amounts vary based on the commission paid, interest rate charged, and length of the agreement.
Around 90,000 consumers whose cases closely align with the Supreme Court's Johnson ruling will receive all commission repaid plus interest. These are defined as cases involving an undisclosed contractual tie and/or DCA with very high commission of at least 50% of the total cost of credit and 22.5% of the loan.
For all other eligible cases, the FCA has introduced a hybrid remedy. Consumers receive the average of their estimated loss and the commission paid, plus interest. The estimated loss is based on the difference in APR between DCA loans and flat fee arrangements:
- Agreements from 1 April 2014 onwards: APR adjustment of 17%
- Agreements before 1 April 2014: APR adjustment of 21%, reflecting evidence that more harmful DCAs were more prevalent in earlier years
Compensation is capped in approximately 1 in 3 cases at the lowest of 90% of commission plus interest, the total cost of credit adjusted for market rates, or the actual total cost of credit.
Interest on compensation is calculated at the annual average Bank of England base rate plus 1%, with a minimum floor of 3% for any year.
What Are the Key Dates and Deadlines?
The FCA has split the scheme into two periods to protect consumers if the earlier period faces legal challenge:
| Period | Implementation deadline |
|---|
| 1 April 2014 to 1 November 2024 | 30 June 2026 |
| 6 April 2007 to 31 March 2014 | 31 August 2026 |
If you have already complained (or complain before the implementation deadline): your lender has 3 months from the end of the implementation period to tell you whether you are owed compensation and how much.
If you have not yet complained: lenders have 6 months from the end of the implementation period to contact those who are potentially owed money. You then have 6 months to respond. If you are not contacted, you can still complain to your lender by 31 August 2027.
Millions of people are expected to receive compensation in 2026, with most of the remainder by end of 2027.
How Does This Compare to the Original Proposals?
The FCA received over 1,000 consultation responses and made several changes:
| Original consultation | Final scheme |
|---|
| Eligible agreements | 14.2 million | 12.1 million |
| Total redress (at estimated uptake) | £7.5 billion | £7.5 billion |
| Average payout per agreement | £695 | £829 |
| Total cost to firms | £11 billion | £9.1 billion |
| Non-redress costs | £2.8 billion | £1.6 billion |
The scheme has been streamlined -lenders no longer need to write to all customers, only those potentially owed money or those ruled out on limitation grounds. The FCA says this cuts the cost of delivering the scheme by over 40%.
Do You Need a Claims Management Company?
You do not need a claims management company. You can complain to your lender directly for free, and the FCA strongly advises doing so. Claims management companies and law firms may take over 30% of any compensation you receive.
The FCA has removed or amended over 800 misleading adverts from claims management companies since January 2024 and intervened with 5 CMCs causing harm. A taskforce with the Solicitors Regulation Authority, Advertising Standards Authority, and Information Commissioner's Office has been set up to tackle poor practices.
If you have already complained through a CMC, your complaint will still be processed under the scheme.
What Should You Do Now?
The scheme is not yet operational -lenders have until 30 June 2026 (post-2014 agreements) or 31 August 2026 (pre-2014) to implement it. However, you can complain to your
car finance lender now to get in the queue. You don't need paperwork -your lender must check their records. If you took out PCP or HP finance on a car, van, motorbike, or motorhome between 2007 and 2024, it costs nothing to check.
If you are unsure which lender financed your vehicle, check your original finance agreement or contact the dealer. You can also check your credit file for historical finance agreements.
For more detail on how motor finance mis-selling works, including
discretionary commission arrangements and how
PCP finance operates, see our free guides.
The FCA has set up a dedicated supervisory team led by a Director to monitor compliance. Firms' senior managers must personally attest to their oversight of the scheme, and the FCA will use enforcement powers against firms that fail to comply.
How Does This Affect the Car Finance Market?
The FCA notes the motor finance market has continued to function well. A record £41 billion was lent on motor finance in 2025 (6% up on 2024), and new car sales in February reached a 22-year high. Share prices of affected UK listed lenders increased between 2.1% and 29.7% in the two weeks following the Supreme Court judgment.
The FCA concludes there will be limited impact on the new
car finance market, with strong competition between lenders expected to continue. Without a scheme, the cost of dealing with complaints individually would be over £6 billion higher and uncertainty would continue for years.
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