Why the FCA is acting now
The FCA confirmed the motor finance redress scheme on 30th March 2026 after concluding that many lenders did not properly tell customers key information about their agreements. The aim is to create a clear framework for firms to review affected agreements and pay compensation where consumers lost out.
For years, dealers and brokers earned commission on car finance agreements. In some cases, higher interest charges increased that commission. Many customers say firms did not explain this clearly. As a result, some drivers may have paid more than they should have. That is why the FCA has now adopted a market-wide approach.
A single redress scheme should give drivers a clearer route to compensation. It should also reduce delays and deliver more consistent outcomes across lenders.
Who could qualify under the FCA redress scheme for car finance
Mis-selling happens when people do not receive the key information they need to make an informed decision. You could fall within scope if you financed a car, motorbike or van between 6th April 2007 and 1st November 2024. This includes PCP and HP agreements. In most cases, a dealer or broker arranged the finance and a lender funded it. If commission was involved and not explained clearly, your agreement could fall within scope of the FCA redress scheme for car finance. However, not every agreement will qualify. The FCA says some agreements will be treated as fair, including those with very low commission, 0% APR deals, and some arrangements with visible links between the lender, manufacturer, and franchised dealer.
Ask yourself:
- Was your agreement taken out between 6th April 2007 and 1st November 2024?
- Did a dealer or broker arrange the finance?
- Did the lender pay commission that was not made clear?
If you answered “yes” to each, your agreement could fall within scope of the FCA redress scheme for car finance.
How much could drivers receive?
Payouts will vary by case. They should reflect any extra interest or loss linked to undisclosed commission. The FCA estimates that 12.1 million agreements are eligible for compensation and that average payouts will be around £830 per agreement, although some people may receive more and others less. Either way, the aim is to deliver a fairer and more consistent outcome. For a broader look at car finance compensation, expected payout timing and what drivers should do next, read our latest car finance compensation update.
The scale of the issue is significant. Lloyds Banking Group has reportedly set aside £2 billion for potential compensation, while wider industry cost estimates reached £8.2 billion to £9.7 billion during the FCA’s consultation on the proposed scheme. BMW’s finance arm is among the firms affected, and the wider issue has drawn political attention, including intervention attempts linked to Chancellor Rachel Reeves during the Supreme Court stage of the wider motor finance case. That underlines how large this issue is for lenders, regulators and government alike.
What drivers should do now under the FCA car finance redress scheme
Now the FCA car finance redress scheme is confirmed, it is worth gathering your paperwork and checking the details of your agreement. Try to identify the lender, the broker or dealer, and the date the finance started. You should also keep copies of any emails, letters or earlier complaints linked to the agreement.
If you think you may have been affected, you can stay up to date with FCA developments and review your options carefully. Some drivers choose to complain directly, while others prefer support with finding agreements and preparing their case.
As the FCA redress scheme moves into implementation, keeping clear records now could make the next steps easier. If you want to see whether your agreement could be affected, you can use our short survey.
When should you hear from your lender?
For agreements that started from 1st April 2014, customers who complain before 30th June 2026 should hear from their lender by 30th September 2026 at the latest. For agreements that started between 6th April 2007 and 31st March 2014, customers who complain before 31st August 2026 should receive a response by 30th November 2026 at the latest. Eligible customers who do not complain should still be contacted by lenders within 6 months of the scheme starting.
FCA redress scheme car finance: common questions
Yes. It covers regulated car finance agreements, including PCP and HP. The focus is on commission and disclosure.
No. The scheme is lender-led, and the FCA says you do not need to use a claims management company or law firm to take part. You can also complain directly. Some drivers still choose extra support with gathering evidence, tracking updates and understanding the next steps.
If you have already complained and had an acknowledgement from your lender, you do not need to do anything for now. The FCA says those customers should be compensated sooner than people who wait to be contacted.
There may still be routes to redress. The details will depend on the firm involved and the dates of the agreement.
That depends on when your agreement began and whether you complain before the scheme deadline. The FCA has published target dates for when customers should hear from lenders.
No. Some agreements are outside scope, including 0% APR deals, some low-commission cases, some clearly linked manufacturer and dealer arrangements, and certain high-value or excluded agreements.
For the latest official position, read the FCA’s car finance complaints guidance.
Key benefits of a single redress scheme
A single redress scheme should create more consistent decisions across the market. It should also reduce backlogs and give drivers a clearer route to compensation.
It should also make the process easier to understand. Customers would know what information matters, what timeframes apply, and what happens next. That clarity would help both consumers and lenders.
Our view on what comes next
We welcome the FCA redress scheme. It brings more structure to a complex issue and should create a clearer route for affected drivers. The FCA has now confirmed the model and moved the scheme into implementation. Even so, the direction is clear. Drivers deserve fair refunds where commission increased their costs unfairly.
That is why preparation matters. Drivers should keep their paperwork, track updates, and understand how the confirmed scheme could affect their agreement. Taking these steps now could make the process easier as the scheme moves through implementation.
This scheme is not only about fixing past harm. It could also set a new benchmark for motor finance. For lenders and brokers, it is a chance to rebuild trust, improve standards, and show what good practice looks like in a changing market.
Why this page matters
This page explains the confirmed FCA redress scheme for car finance and what it could mean for affected drivers. If you want to see whether your own agreement could be affected, you can take our short survey.
We also publish updates on lender-specific issues and wider market developments, including Black Horse and MotoNovo
Next steps if you think your agreement was affected
If you took out car finance between 6th April 2007 and 1st November 2024, now is a good time to review your paperwork and identify your lender. The FCA redress scheme for car finance could affect a wide range of agreements, especially where commission was not explained clearly.
You can also take simple steps now, such as checking old finance documents, reviewing past correspondence, and keeping track of FCA updates. That way, you will be in a stronger position as the scheme moves through implementation.
If you want to see whether your agreement could be affected, you can use our short survey. It only takes a few minutes to find your lenders.
