The FCA redress scheme for car finance — what to expect in 2026

What is the redress scheme?

The Financial Conduct Authority (FCA) has been reviewing how car finance was sold in the UK between 2007 and 2021. Their focus has been on discretionary commission arrangements (DCAs) — a practice where car dealers could set the interest rate on your finance agreement and earn more commission by charging you a higher rate.

In October 2025, the FCA published Consultation Paper CP25/27, proposing an industry-wide Consumer Redress Scheme. This would require lenders to review affected agreements and pay compensation to consumers who were overcharged. The scheme covers agreements entered into between 6 April 2007 and 1 November 2024.

Why is a redress scheme needed?

The scale of the problem is enormous. The FCA estimates that the total redress could reach up to £8.2 billion including interest, with total industry costs of approximately £11 billion when implementation is included. An estimated 44% of agreements since 2007 may have been affected, with around 14 million deals potentially in scope.

With millions of affected agreements, handling claims individually through the Financial Ombudsman would be slow and impractical. A redress scheme streamlines the process:

Who is eligible?

You may be eligible if you:

You do not need to have the original paperwork. The lender holds the records and is responsible for checking whether your agreement was affected.

How much could you receive?

The FCA has indicated that average redress may be around £700 per qualifying agreement including interest. The actual amount depends on several factors:

Many consumers had multiple car finance agreements during this period, so the total compensation could be higher.

What is the timeline?

The FCA temporarily paused complaint handling to allow time to design the scheme properly. In December 2025, the FCA confirmed that the pause on motor finance complaints handling will lift on 31 May 2026, with firms required to retain records until 11 April 2031.

Key dates:

What about the court rulings?

In October 2024, the Court of Appeal ruled in Johnson v Firstrand Bank that it was unlawful for brokers to receive commission without proper disclosure and informed customer consent. The Supreme Court heard the appeal in April 2025 and delivered its judgment on 1 August 2025, partly upholding the Court of Appeal's findings.

These rulings have reinforced the basis for the FCA's proposed redress scheme.

What should you do now?

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 the scheme to be formally launched to start gathering your information.

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 act as soon as the scheme is confirmed.