TL;DR
The FCA confirmed the motor finance consumer redress scheme on 30 March 2026 in Policy Statement PS26/3. Around 12.1 million agreements taken out between 6 April 2007 and 1 November 2024 are eligible, with an average payout estimated at £830 per agreement. The total expected redress is £7.5 billion. Lenders contact eligible customers directly, with no claims management company needed.
The Financial Conduct Authority finalised the motor finance consumer redress scheme in Policy Statement PS26/3, published on 30 March 2026. The scheme addresses historic failings in commission disclosure on motor finance agreements which, in the FCA's view, created unfair relationships under the Consumer Credit Act 1974.
The scheme covers regulated motor finance agreements for cars, motorbikes and vans. It does not cover business hire purchase or finance for commercial vehicles owned by a registered business.
Who qualifies
An agreement is in scope of the scheme if all of the following apply:
- The agreement was taken out between 6 April 2007 and 1 November 2024.
- The finance was used to buy a car, motorbike or van.
- The agreement was a regulated consumer credit agreement (most personal motor finance is regulated).
- Commission was paid by the lender to the broker or dealer.
- The commission arrangement was not adequately disclosed to the customer.
The FCA estimates that around 12.1 million agreements meet these criteria, down from an earlier estimate of 14.2 million in the consultation paper. The narrower scope reflects exclusions for low-commission deals and previously settled complaints.
Who is excluded
Several categories of agreement are excluded from the scheme:
- Customers who already received redress for the same agreement.
- Complaints determined by a court or by the Financial Ombudsman Service.
- Low-commission deals: agreements before 1 April 2014 with commission of £120 or less, and agreements from 1 April 2014 onwards with commission of £150 or less. The FCA classifies these as fair and not eligible.
- High-value loans: the top 0.5% of loans by value in each year are excluded.
- Business hire purchase and other commercial agreements.
How the £830 figure is calculated
The FCA's methodology compares what the customer actually paid against what they would have paid if the broker's commission had been set without discretion to increase the interest rate. The difference is the redress.
Simple interest is added on top, calculated at the Bank of England base rate plus 1% per year, from the date the commission was paid to the date compensation is paid. The minimum interest rate applied for any year is 3%.
The £830 figure is the FCA's central estimate of the average redress per agreement. Actual payouts will vary. Some customers will receive less, some considerably more, depending on the size of the loan, the commission amount and the length of the agreement.
How customers get paid
Lenders are required to identify eligible customers from their own records and contact them. No claim form is required. The FCA timeline expects:
- Lenders to contact customers with agreements from 1 April 2014 onwards by the end of 2026.
- Lenders to contact customers with agreements between 6 April 2007 and 31 March 2014 by the end of February 2027.
- The majority of claims to be settled by the end of 2027.
Customers do not need to use a claims management company or law firm. The FCA has warned that doing so usually means paying a fee of 15% to 30% plus VAT on any redress received.
Watch out for scams
The FCA has set up a motor finance scams helpline because of expected scam activity around the scheme. Genuine lenders will not ask for upfront fees, PIN numbers or online banking credentials. Contact details for each lender are listed on the FCA register at fca.org.uk.
Key facts
- Scheme covers car, motorbike and van finance taken out 6 April 2007 to 1 November 2024.
- Around 12.1 million agreements eligible; total redress estimated at £7.5 billion.
- Average payout per agreement estimated at £830.
- Excludes agreements with commission of £120 or less (pre-April 2014) or £150 or less (post-April 2014).
- Excludes top 0.5% of loans by value each year, and previously settled complaints.
- Lenders contact eligible customers automatically; no claims firm needed.
FAQ
What happens if the original lender no longer exists?
Where a lender has been bought out, the successor firm is responsible for assessing the agreement. Where a lender has gone out of business and was not bought out, motor finance is not covered by the Financial Services Compensation Scheme, and redress may not be available.
Does the scheme cover Personal Contract Purchase (PCP) deals?
Yes. PCP, Hire Purchase (HP) and Conditional Sale agreements taken out within the eligible window are all in scope, provided the other criteria are met.
Can a customer who already complained get more under the scheme?
Customers whose complaint was already settled, determined by a court, or determined by the Financial Ombudsman Service are excluded. Customers with an open complaint not yet determined may have their case considered under the scheme rules.
Is there a deadline to act?
Customers do not need to take action to receive redress; lenders contact eligible customers automatically. Customers who want to complain proactively can do so via the lender's standard complaints process. The FCA has not set a deadline for customer-initiated complaints under the scheme.
