The complete Kaeltripton guide to mis-sold car finance in 2026 — the FCA PS26/3 redress scheme, the Supreme Court ruling, who is eligible, and how to claim direct with your lender at no cost.

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Between 2007 and 2024, millions of UK consumers entered into motor finance agreements where commission paid by the lender to the dealer was either undisclosed or only partially disclosed. The Financial Conduct Authority (FCA) banned the most harmful version of these arrangements, discretionary commission arrangements (DCAs), in January 2021, but historic agreements remained in place. Following the Court of Appeal's October 2024 judgment in Johnson v FirstRand and the Supreme Court's August 2025 ruling in the conjoined Hopcraft, Johnson and Wrench appeals, the FCA published Policy Statement PS26/3 on 30 March 2026 confirming an industry-wide consumer redress scheme. The scheme covers approximately 12.1 million regulated motor finance agreements entered into between 6 April 2007 and 1 November 2024, with total redress projected at £7.5 billion and an estimated average payout of £830 per eligible agreement. As of May 2026, the scheme has been legally challenged by Consumer Voice (a consumer campaign group), Mercedes-Benz Financial Services, Volkswagen Financial Services, and Crédit Agricole Auto Finance, the FCA has stated it will defend the scheme robustly. This guide sets out what happened, whether you may be eligible, and how to pursue any complaint directly with your lender, free of charge, without the need for a claims management company or solicitor.

What the motor finance scandal is and why it matters in 2026

A discretionary commission arrangement (DCA) was a commercial arrangement between a motor finance lender and a car dealer, under which the dealer had the authority to set the interest rate on a customer's finance agreement within a range permitted by the lender. Because the dealer's commission increased in line with the interest rate charged, dealers had a financial incentive to charge consumers as much interest as the range allowed, regardless of the consumer's creditworthiness or the rate they would otherwise qualify for.

Crucially, this conflict of interest was almost never disclosed to consumers at the point of sale. A customer selecting a car on a forecourt would be quoted a monthly payment figure, often without being told that the dealer, not an independent underwriter, was setting their interest rate, and that the dealer stood to earn more money the higher that rate was set.

The FCA identified this practice as a significant source of consumer harm during its supervisory work. In its Policy Statement PS20/8, published in July 2020 (effective January 2021), the FCA prohibited discretionary commission models in regulated motor finance agreements. The ban applied to new agreements from 28 January 2021. Historical DCA agreements, those entered into before that date, remained in place and, in the FCA's subsequent analysis, represented a substantial pool of potentially affected consumers.

On 11 January 2024, the FCA announced a formal review of historical DCA motor finance business. The FCA paused the standard eight-week complaint-response requirement for lenders while it designed what it described as a potential industry-wide redress scheme. In September 2024, the FCA published an update confirming it would wait for the outcome of legal proceedings before setting final scheme parameters. Those legal proceedings, specifically the Court of Appeal and Supreme Court cases described in the next section, have materially shaped the scope of any future scheme.

Following the Supreme Court's judgment of 1 August 2025 in the conjoined Hopcraft, Johnson and Wrench appeals ([2025] UKSC 33), the FCA consulted on an industry-wide redress scheme via Consultation Paper CP25/27 (7 October 2025) and published its final rules in Policy Statement PS26/3 on 30 March 2026. The full text is available at fca.org.uk/publications/policy-statements/ps26-3. The scheme is currently subject to legal challenge before the Upper Tribunal, the FCA confirmed on 1 May 2026 that it would defend the scheme robustly as lawful. Consumers should monitor the FCA's motor finance complaints page at fca.org.uk/consumers/motor-finance-complaints for updates.

The Court of Appeal and Supreme Court rulings: what they decided

The legal landscape around motor finance commission was transformed by two linked judgments: the Court of Appeal decision in October 2024 and the Supreme Court ruling in August 2025.

In October 2024, the Court of Appeal handed down judgment in three conjoined cases: Johnson v FirstRand Bank Ltd (t/a MotoNovo Finance), Wrench v FirstRand Bank Ltd, and Hopcraft v Close Brothers Limited. The judgment, available at judiciary.gov.uk/judgments/, held that car dealers acting as credit brokers owed their customers a "disinterested duty" and an ad hoc fiduciary duty, and that undisclosed commissions could amount to bribes in the legal sense. Critically, the Court of Appeal's reasoning extended beyond DCAs to any undisclosed or insufficiently disclosed commission. This widened the potential scope of claims significantly.

Lenders appealed to the Supreme Court. On 1 August 2025, the Supreme Court delivered its judgment in Hopcraft v Close Brothers Limited; Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance; Wrench v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2025] UKSC 33. Available at supremecourt.uk, the Supreme Court reversed the Court of Appeal on the bribery and fiduciary/equity claims. The justices held unanimously that car dealers in standard motor finance transactions did not owe a fiduciary duty to customers. Without a fiduciary duty, the tort of bribery could not be engaged.

However, the Supreme Court upheld Mr Johnson's claim under section 140A of the Consumer Credit Act 1974, finding his relationship with FirstRand to be "unfair." This finding rested on three fact-specific factors: the size of the commission paid to the dealer (£1,650.95, representing 55% of the total charge for credit); the misleading nature of the dealer's "Suitability Document" suggesting the dealer worked across a panel of lenders when it was contractually tied to FirstRand; and the lack of adequate disclosure of that commercial tie. The court ordered FirstRand to pay Mr Johnson the commission amount plus interest. The Supreme Court was clear that whether any individual relationship was "unfair" is a highly fact-sensitive assessment.

For a full analysis of the judgments and what they mean in practice, see our companion article: Car Finance Supreme Court Ruling Explained.

Who can claim: eligibility checklist

The FCA's redress scheme under PS26/3 covers approximately 12.1 million regulated motor finance agreements meeting specific eligibility criteria. The following checklist sets out the primary eligibility indicators based on FCA-published rules. This is not a legal assessment, eligibility in any individual case depends on the specific terms of the agreement and the lender's review under the scheme.

You may be eligible for redress if ALL of the following apply:

• Your motor finance agreement was a regulated consumer credit agreement entered into between 6 April 2007 and 1 November 2024.
• The agreement was a Personal Contract Purchase (PCP) or Hire Purchase (HP) product. These are the two main product types within scope. Personal Contract Hire (PCH) and operating leases are excluded.
• The agreement was arranged through a dealer or broker acting as a credit broker.
• Commission was payable by the lender to the broker.
• There was inadequate disclosure of at least one of three defined arrangements: a discretionary commission arrangement (DCA); a high commission arrangement (commission representing at least 39% of the total cost of credit and at least 10% of the loan amount); or a contractual tie between lender and broker giving the lender exclusivity or right of first refusal.

Agreements that are typically OUTSIDE scope:

• Personal Contract Hire (PCH) and operating lease agreements, these are excluded from the FCA scheme.
• Business car finance agreements financed for primarily business use.
• Zero-APR agreements (the FCA confirmed these will be considered fair).
• High-value loans above the 99.5th percentile (excluded under PS26/3).
• Agreements where the consumer has already had their complaint considered by the Financial Ombudsman, had their claim determined by a court, or accepted redress, these are excluded from the scheme but may still be addressed via individual complaints.
• Agreements where the lender can demonstrate visible commercial links between manufacturer, dealer and lender (in which case a contractual tie alone will not trigger compensation).

If you are uncertain whether your agreement falls within scope, you do not need to determine this yourself. Lenders are required under PS26/3 to identify eligible customers from their own records and contact them directly. You can also obtain a copy of your full agreement and any commission disclosure documents via a Subject Access Request (SAR) to your lender under UK GDPR, the lender must respond within 30 days, free of charge.

How to claim direct with your lender (the free route)

You do not need to use a claims management company to claim. Under PS26/3, lenders are required to identify eligible customers proactively and contact them directly. However, if you wish to submit a complaint now, particularly if you have not yet been contacted by your lender, the direct route costs nothing and is straightforward.

Step 1: Identify your lender

Your lender is the finance company, not the car dealer. Common motor finance lenders include Black Horse (part of Lloyds Banking Group), Close Brothers Motor Finance, MotoNovo Finance (FirstRand Bank), Santander Consumer Finance, Volkswagen Financial Services, and several others listed in the table below. Your lender's name will appear on your original finance agreement and on any statements you received. If you do not have the paperwork, your credit file (available free via a credit reference agency such as Equifax, Experian, or TransUnion) will show the lender's name.

Step 2: Submit a Subject Access Request (SAR)

Before complaining, it is advisable to obtain a copy of your full agreement file. Write to your lender requesting all personal data held about you in connection with the finance agreement, including the agreement itself, any commission or introducer payment records, and correspondence from the time of sale. The lender must respond within 30 days under UK GDPR and cannot charge a fee. Template SAR letters are available from Citizens Advice at citizensadvice.org.uk.

Step 3: Submit a written complaint

Send a written complaint to your lender's complaints department. Your complaint should:

• Identify the agreement by date, agreement number (if known), and vehicle.
• State that you believe the agreement may fall within the scope of PS26/3 because commission was paid to the dealer that was inadequately disclosed.
• State that you were not told about the commission, its size, or any contractual tie between the dealer and lender.
• Reference the FCA's PS26/3 motor finance redress scheme and the Supreme Court ruling in [2025] UKSC 33.
• Request that the lender investigate and confirm whether your agreement falls within the scheme's eligibility criteria.

Step 4: Await the lender's response

Under PS25/18 (December 2025), the FCA extended the time firms have to send final responses to DCA and non-DCA commission complaints to align with the redress scheme implementation timetable. PS26/3 specifies implementation periods of 30 June 2026 for Scheme 2 (post-April 2014 agreements) and 31 August 2026 for Scheme 1 (April 2007 to March 2014 agreements). Final responses and redress payments will follow these implementation periods, subject to any delay arising from the ongoing legal challenges. Check the FCA's current guidance at fca.org.uk/consumers/motor-finance-complaints for the current position.

Step 5: If the lender rejects your complaint or fails to respond

If the lender rejects your complaint, issues a final response you are unhappy with, or fails to respond within the applicable time limit, you can escalate to the Financial Ombudsman Service at no cost. See the next section for how FOS works.

The Financial Ombudsman Service (FOS) escalation route

The Financial Ombudsman Service (FOS) is an independent, free-of-charge dispute resolution service for financial services complaints in the UK. If your lender has rejected your complaint, issued a final response you find unsatisfactory, or failed to respond within the applicable timeframe, you have the right to refer your complaint to FOS.

FOS is entirely free for consumers. There is no fee at any stage. Details of the FOS motor finance complaints process are published at financial-ombudsman.org.uk.

FOS can award compensation up to its current published award limit (verify the latest figure at the FOS site as these are reviewed periodically). For most motor finance agreements, the amounts at issue will be substantially below this limit.

Typical FOS adjudication timescales for motor finance complaints have extended significantly since the volume of DCA-related cases increased. FOS's published management information (available at financial-ombudsman.org.uk/data-and-insight) indicates that complex cases may take 12 to 18 months or longer from referral to final decision. If you refer your case to FOS, keep your reference number and check the FOS online case tracker.

Note that consumers who have already had their complaint considered by FOS, had their claim determined by a court, or accepted redress are excluded from the FCA's PS26/3 scheme, but their FOS or court outcomes stand on their own terms. The scheme and the FOS route are alternatives, not duplicates.

For a detailed explanation of how commission structures worked, see our companion article: Discretionary Commission Arrangement Explained.

What the FCA redress scheme means for your claim

The FCA's PS26/3 scheme, published 30 March 2026, is an industry-wide statutory consumer redress scheme made under section 404 of the Financial Services and Markets Act 2000. The full policy statement is available at fca.org.uk/publications/policy-statements/ps26-3.

Key features of the scheme as confirmed in PS26/3:

• Two parallel schemes: Scheme 1 covers agreements entered into between 6 April 2007 and 31 March 2014; Scheme 2 covers agreements between 1 April 2014 and 1 November 2024. The two-scheme structure protects post-2014 redress from being delayed if the earlier period is challenged on legal grounds.
• Approximately 12.1 million eligible agreements (down from 14.2 million at consultation), following tightened eligibility criteria.
• Estimated total redress: £7.5 billion, based on a projected 75% take-up rate.
• Estimated average payout: £830 per eligible agreement (the FCA's published figure following its final modelling).
• Free for consumers to use. Lenders bear all costs of identifying eligible customers, calculating redress, and making payments.
• Lender-led identification: Lenders must review their records, identify eligible agreements, and invite customers into the scheme. Customers who have already complained will be processed first.
• Implementation periods: Scheme 2 (post-April 2014) by 30 June 2026; Scheme 1 (April 2007 to March 2014) by 31 August 2026. These dates may be affected by the ongoing legal challenges.
• Compensatory interest: A minimum 3% per annum simple interest applies, calculated from the date of overpayment to the date of payment.
• Caps on the hybrid remedy: In approximately one in three cases, redress is capped to ensure consumers are not put in a better position than had they been treated fairly.

The scheme is currently subject to legal challenge before the Upper Tribunal under section 404D FSMA 2000. The challengers include Consumer Voice (a campaign group arguing the redress level is too low), Mercedes-Benz Financial Services, Volkswagen Financial Services, and Crédit Agricole Auto Finance (arguing the scheme is too costly or too broadly scoped). The FCA published a statement on 1 May 2026 confirming it would defend the scheme robustly as lawful. The challenges may delay implementation of one or both schemes.

For consumers who want to model an indicative redress range based on FCA-published parameters, see our estimator: Motor Finance Payout Estimator UK 2026.

Major UK motor finance lenders: status overview

The following table provides a reference overview of major UK motor finance lenders within the scope of the FCA's PS26/3 scheme. Status information is based on FCA register data and publicly available lender communications as at May 2026. Verify current contact details and complaint processes directly with each lender.

Verify each lender's FCA authorisation status and current registered complaint address via the FCA Financial Services Register at register.fca.org.uk before submitting any complaint.

What about Personal Contract Hire (PCH) and lease agreements?

Personal Contract Hire (PCH) and operating lease agreements are explicitly excluded from the FCA's PS26/3 redress scheme. The FCA confirmed in PS25/18 (December 2025) that firms must begin sending final responses to complaints about leasing agreements from 5 December 2025, as those agreements are outside the scheme's scope.

The legal and regulatory distinction is important. A PCH or operating lease agreement does not involve a transfer of ownership or a purchase option. The consumer rents the vehicle for a fixed period and returns it at the end, with no right to buy. Because PCH agreements are structured as hire contracts rather than credit agreements, they are generally not regulated consumer credit agreements under the Consumer Credit Act 1974, the statute that forms the legal foundation of the DCA claim framework.

The Court of Appeal and Supreme Court rulings in Hopcraft, Johnson and Wrench were decided in the context of regulated consumer credit agreements, specifically HP and PCP products. PCH agreements do not fit the legal structure those rulings addressed.

If your agreement is described as a "regulated hire purchase agreement" or "regulated personal contract purchase agreement" and was entered into between 6 April 2007 and 1 November 2024, it may be within scope of PS26/3. Lease and PCH agreements are not.

Consumer Rights Act 2015 and faulty used cars: a separate route

It is important to understand that the motor finance mis-selling claim (based on undisclosed commission) is entirely separate from consumer rights claims arising from vehicle faults or misrepresentation at the point of sale.

If you have a complaint about a vehicle that was not as described, was unfit for purpose, or developed faults within the statutory timeframe after purchase, your rights arise under the Consumer Rights Act 2015, and your claim is against the dealer or seller, not the finance lender. These claims operate on different legal grounds, different timelines, and through different resolution routes. For a full guide to this separate area, see: Used Car Consumer Rights Act 2015: Your Full Guide.

Realistic timeline: how long will the redress scheme take?

Setting realistic expectations is important for any consumer pursuing a mis-sold car finance complaint or awaiting redress under PS26/3.

Lender identification and customer contact: Under PS26/3, lenders are required to invite eligible customers (who have not already complained) into the scheme within 6 months of scheme start. Customers then have up to 6 months to opt in. Customers who have already complained will be told within 3 months of scheme start whether they are owed redress and how much. Implementation deadlines: Scheme 2 (post-April 2014 agreements) by 30 June 2026. Scheme 1 (April 2007 to March 2014 agreements) by 31 August 2026. These dates may be affected by the ongoing legal challenges before the Upper Tribunal. FOS adjudication timeline: For complaints pursued via FOS rather than the scheme, FOS published management information indicates complex motor finance cases typically take 12 to 18 months from referral to final decision. Tax treatment of redress payments: HMRC has published guidance on the tax treatment of financial services redress payments. In general, compensation for overpaid interest does not constitute taxable income, but the compensatory interest element (paid at a minimum 3% per annum under PS26/3) may be subject to income tax. The relevant HMRC guidance is available at gov.uk. If you receive a redress payment and are uncertain about its tax treatment, consult a tax adviser or refer to HMRC's published guidance.

What to avoid: red flags in the claims market

The motor finance scandal has attracted a significant number of claims management companies (CMCs), solicitor firms, and other businesses marketing claim services to consumers. Many of these businesses operate legitimately, but the claims market contains practices that consumers should be aware of.

Cold calls and unsolicited contact: Be cautious of phone calls, text messages, or emails informing you that you have been "pre-approved" for motor finance compensation or that you "definitely" have a valid claim. No third party has access to your finance agreements and can make that assessment without your specific documents. Fee structures: Many CMCs advertise "no win, no fee" services but charge a percentage of any compensation recovered, typically 25 to 36% of the total award, which represents a substantial deduction. You do not need to use a claims management company to claim. The free direct, FOS, and PS26/3 scheme routes are available to all consumers. Assignment clauses: Some CMC contracts include clauses assigning your legal right to claim to the CMC. Read any contract carefully before signing. Scams using the scheme as cover: The FCA has warned of scams impersonating lenders and offering "fast track" redress in exchange for upfront fees or banking details. The FCA operates a dedicated motor finance scams helpline, check the FCA website for the current number. Genuine lender contact will not require you to pay any fee or share PINs or online banking details. The FCA register of authorised CMCs: If you choose to use a CMC, verify it is authorised by the FCA using the Financial Services Register at register.fca.org.uk. Using an unauthorised CMC is a risk, and any fee paid to an unauthorised CMC may be unrecoverable.

Sources and verification

All factual claims in this article are drawn from the following primary sources, verified as at 8 May 2026:

• FCA Policy Statement PS26/3: Motor Finance Consumer Redress Scheme (30 March 2026)
• PS26/3 full text (PDF)
• FCA Consultation Paper CP25/27 (7 October 2025)
• FCA Policy Statement PS25/18 (December 2025)
• FCA: Motor finance complaints (consumer page)
• FCA Policy Statement PS20/8 (July 2020)
• Hopcraft v Close Brothers; Johnson v FirstRand; Wrench v FirstRand [2025] UKSC 33
• Court of Appeal: Johnson v FirstRand and others [2024] EWCA Civ 1282
• FOS: Motor finance complaints guidance
• FOS: Data and insight
• Consumer Credit Act 1974, section 140A
• HMRC: Tax treatment of compensation payments
• FCA Financial Services Register
• Citizens Advice: Financial complaints guidance

Frequently asked questions

What is mis-sold car finance?

Mis-sold car finance refers, in the context of the FCA's PS26/3 redress scheme, to motor finance agreements entered into between 6 April 2007 and 1 November 2024 where commission paid by the lender to the dealer was inadequately disclosed. The scheme covers three categories of inadequately disclosed arrangements: discretionary commission arrangements (DCAs), high commission arrangements (commission of at least 39% of the total cost of credit and 10% of the loan), and contractual ties giving lenders exclusivity or right of first refusal.

Who is eligible to claim mis-sold car finance compensation?

Eligibility is set out in PS26/3. You must have had a regulated consumer credit agreement (PCP or HP) arranged through a dealer acting as a credit broker, signed between 6 April 2007 and 1 November 2024, where commission was paid by the lender to the broker and inadequately disclosed under one of the three defined categories. Personal Contract Hire (PCH) and operating leases are excluded. Zero-APR agreements and high-value loans (above the 99.5th percentile) are also excluded.

Do I need a claims management company or solicitor to claim?

No. You do not need to use a claims management company to claim. Under PS26/3, lenders are required to identify eligible customers and contact them directly. You can also complain directly to your lender at no cost, and escalate free of charge to the Financial Ombudsman Service if the lender rejects your complaint. CMCs and solicitors offer a paid alternative route but are not required and typically charge 25-36% of any compensation recovered.

How much will I get if my agreement is in scope?

The FCA's published estimate is an average of approximately £830 per eligible agreement, based on its final modelling in PS26/3. Actual redress varies significantly by agreement size, commission size, and the methodology applied (commission-plus-interest for cases close to the Johnson facts; a "hybrid remedy" averaging commission and APR-adjustment methods for most others). In approximately one in three cases, the hybrid remedy is capped to ensure consumers are not put in a better position than fair treatment would have produced. Compensatory interest of at least 3% per annum simple interest is added on top of the redress amount.

Will making a complaint affect my credit score?

No. Submitting a complaint to your lender or referring a complaint to FOS is not recorded on your credit file and will not affect your credit score. The complaint process is entirely separate from your credit history.

What if I no longer have my car finance paperwork?

You do not need the original documents to start a complaint or to be included in the PS26/3 scheme. Your lender holds all records of the agreement and is required to provide them on request. Submit a Subject Access Request (SAR) to your lender under UK GDPR, they must respond within 30 days, free of charge, with copies of all personal data they hold, including the original agreement and any commission records.

Is mis-sold car finance compensation taxable?

In most cases, redress payments representing a refund of overpaid interest or a return of commission are not taxable income. However, the compensatory interest element of the redress payment (a minimum 3% per annum under PS26/3) may be subject to income tax. HMRC's guidance is available at gov.uk. If you receive a significant redress payment, consider seeking tax advice.

When will I receive my payout under the FCA scheme?

The FCA's PS26/3 implementation periods are 30 June 2026 for Scheme 2 (post-April 2014 agreements) and 31 August 2026 for Scheme 1 (April 2007 to March 2014 agreements). The FCA expects millions of cases to be paid out in 2026, with the vast majority resolved by the end of 2027. However, the scheme is subject to legal challenge before the Upper Tribunal, which may delay implementation. The FCA published a statement on 1 May 2026 confirming it would defend the scheme robustly. Monitor fca.org.uk for updates on timing.