FCA confirms motor finance redress scheme — what it means for you
The scheme is now confirmed
On 30 March 2026, the Financial Conduct Authority (FCA) published Policy Statement PS26/3, confirming the final rules for its motor finance consumer redress scheme. This follows years of investigation, a landmark Supreme Court ruling, and a public consultation that closed earlier this year.
The scheme covers car finance agreements made between 6 April 2007 and 1 November 2024 where consumers were overcharged through discretionary commission arrangements (DCAs). The FCA estimates that 12.1 million agreements are eligible for review, with a total of £7.5 billion expected to be returned to consumers.
What are discretionary commission arrangements?
When you took out car finance through a dealership, the dealer often acted as a broker between you and the lender. Under discretionary commission arrangements, the dealer had the power to increase the interest rate on your agreement above the lender's base rate — and the higher they set it, the more commission they earned.
This meant many consumers were paying more than they needed to, without being told that the dealer had a financial incentive to charge them a higher rate. The FCA found that these arrangements were widespread across the industry and led to significant consumer harm.
How much could you receive?
The FCA has confirmed an average payout of approximately £829 per qualifying agreement. The actual amount depends on several factors, including how much the interest rate was increased and the total value of the agreement.
The scheme uses two approaches depending on when you took out the agreement:
- Scheme 1 (6 April 2007 to 31 March 2014) — applies an APR adjustment of 21% to calculate the overcharge, reflecting the more harmful commission practices common in this earlier period
- Scheme 2 (1 April 2014 to 1 November 2024) — applies a 17% APR adjustment for agreements made during this period
Many consumers had more than one car finance agreement during this time. We find on average two agreements per client, meaning the total compensation could be significantly higher.
Key deadlines you need to know
The scheme has specific deadlines depending on when your agreement was made:
- 30 June 2026 — lenders must begin implementing the scheme for agreements made from 1 April 2014 onwards
- 31 August 2026 — implementation deadline for agreements made before 1 April 2014
- Within 3 months of implementation — your lender must contact you if your agreement is eligible
- 6 months after notification — you have six months to respond once your lender contacts you
- 31 August 2027 — final deadline to make a complaint if your lender does not contact you
Do you need to do anything?
If your agreement is eligible, your lender is required to contact you. However, not all consumers will be contacted directly. If you believe you may have been affected, you can submit a complaint to your lender at any time before 31 August 2027.
The best step you can take now is to find out which car finance agreements you had and whether they may have been affected. You do not need to wait for your lender to contact you.
What if you have already complained?
If you have already made a complaint or had a case resolved through the Financial Ombudsman Service, the redress scheme will not reopen your case. However, if your complaint is still pending, it will be assessed under the new scheme rules.
What should you do next?
Our free tool retrieves your car finance agreements in under 60 seconds, with no impact on your credit score. Having this information ready means you will be in the best position to claim as soon as payouts begin.
Sources:
- FCA Policy Statement PS26/3 — Motor finance consumer redress scheme (March 2026)
- FCA statement — FCA confirms motor finance redress scheme
- FCA Policy Statement PS26/3 — full document (PDF)
- FCA motor finance redress scheme analyst briefing (March 2026)
- MoneySavingExpert — Car finance redress scheme details confirmed