Last reviewed: 1 June 2026
The Financial Conduct Authority confirmed on 31 May 2026 that the pause on motor finance complaint handling, in place since January 2024, has now ended. Lenders and brokers must respond to relevant complaints under the rules set out in Policy Statement 26/3, alongside the industry-wide redress scheme published on 30 March 2026. The scheme is expected to put around £7.5 billion back in consumers' hands.
- Complaint pause lifted: 31 May 2026
- Scheme value: around £7.5 billion (FCA estimate)
- Eligible agreements: motor finance taken out between 2007 and 2024
- Estimated eligible agreements: around 12 million
- Average payout per claim: about £830 (FCA estimate)
- Final implementation deadline for older agreements: 30 June 2026
- Legal challenges to scheme design from three lenders; FCA defending
What the scheme covers
Courts found that motor finance firms broke the law by failing to disclose important information about commission paid to brokers, including car dealers. The Supreme Court and High Court rulings underpin the FCA's scheme. Consumers were denied the chance to seek a better deal and in many cases paid more for their loan than they otherwise would. The FCA estimates around 12 million agreements may be in scope, with the scheme free for consumers to use.
How to claim
Consumers do not need to use a claims management company or law firm to make a complaint, and using one may cost more than 30 percent of any compensation. The FCA has said over 800 misleading adverts have been removed or amended by claims management companies since January 2024. Anyone who took out a motor finance agreement between 2007 and 2024 can complain directly to the lender, free of charge. The FCA's published guidance sets out how to identify the relevant lender and what details to include in a complaint.
What the legal challenges mean
Three lenders submitted legal challenges to the scheme's design on 1 May 2026. Consumer Voice has separately launched legal action arguing that the calculation methodology may leave consumers hundreds of pounds out of pocket per claim. The FCA published a statement on 8 May setting out its expectations that firms continue to prepare for the scheme. The regulator has said it will defend the scheme as lawful and as the quickest way to resolve a widespread issue.
Implementation timeline
The implementation period runs to 30 June 2026 for loans taken out from 1 April 2014, with a longer period for older agreements. The FCA expects the majority of payouts to be made during 2026, with the bulk completed by the end of 2027. Lenders must contact complainants and those due compensation, but do not need to use recorded delivery. Firms' senior managers will be required to attest to oversight and delivery of the scheme.
What about leasing
Leasing complaints are not in scope of the compensation scheme. Firms have been required to send final responses to motor leasing complaints in line with normal complaint handling rules since 5 December 2025. Anyone with a leasing-only agreement should follow the standard FOS route if dissatisfied with the lender's response.
FAQs
Do I need to do anything to claim?
Lenders are required to contact affected customers. Anyone who took out motor finance between 2007 and 2024 can also complain directly to the lender now that the pause has lifted, without using a claims management company.
How much will I get?
The FCA estimates an average payout of around £830, though actual amounts vary by agreement size, original APR and the level of commission paid. The Consumer Voice legal challenge argues the methodology under-states losses.
What if I have a court case underway?
If a court case is stayed or withdrawn, the lender continues to deal with the claim under the redress scheme. If the case proceeds to a hearing on liability, it can no longer be considered under the scheme.
Will the legal challenges delay payouts?
The FCA has said it does not expect the challenges to delay the scheme. Firms must continue preparing. The complaint pause has been lifted as planned.
