The FCA Car Finance Redress Scheme Explained

What is the FCA redress scheme?

The FCA redress scheme is the regulator's plan to put right car finance deals affected by undisclosed commission. It was finalised on 30 March 2026 (PS26/3), following the Supreme Court ruling of 1 August 2025.

The FCA — the Financial Conduct Authority — regulates UK motor finance lenders. Rather than leaving everyone to sue individually, an industry-wide scheme aims to handle affected agreements consistently, with the same eligibility test and the same redress method applied by every firm.

The scheme applies to agreements from 6 April 2007 to 1 November 2024, where the lender paid commission to a broker. It was tightened between the consultation and the final version: 0% and minimal-commission deals are now excluded, and eligibility focuses on three specific disclosure failures.

Do you qualify?

You may qualify if you took car finance between 6 April 2007 and 1 November 2024, where commission was payable to a broker, and you were not properly told about a DCA, a high-commission arrangement or a contractual tie.

Qualifying is not automatic. The FCA estimates around 12.1 million agreements fall in scope, but each is assessed on its own facts. Work through the honest checklist on am I eligible, or read about DCAs.

• Your agreement started in the 6 April 2007 – 1 November 2024 window (commission payable to a broker).
• It was arranged through a dealer or broker who was paid commission.
• You were not told about a discretionary commission arrangement (DCA).
• Or you were not told about a high-commission arrangement (at least 39% of total cost of credit and 10% of the loan), or an undisclosed contractual tie.

The three disclosure failures the scheme targets

The scheme focuses on three specific failures, not on car finance in general. Your agreement has to match one of them to qualify.

All three turn on the same idea: a secret conflict between the broker's incentive and your interest. The Supreme Court's 1 August 2025 ruling (Johnson, on section 140A of the Consumer Credit Act 1974) held that this kind of undisclosed commission can itself make the lending relationship unfair — which is the legal foundation the scheme is built on.

If your deal doesn't fit any of the three — for example, a 0% APR offer, a deal where commission was minimal, or one where the commission was properly disclosed — it is generally out of scope. Work through the am I eligible checklist to see where you stand.

• Undisclosed discretionary commission (DCA): the broker could lift your rate — and their own pay — without telling you. The FCA banned new DCAs on 28 January 2021.
• Undisclosed high-commission arrangement: a fixed commission that was both large in absolute terms (at least 39% of the total cost of credit and at least 10% of the loan) and not properly disclosed.
• Undisclosed contractual tie: an arrangement tying the broker to a single lender, limiting your ability to shop around, which you were not told about.

How much could it pay?

The scheme is built around returning overpaid interest, plus interest on top — not a flat figure. The FCA puts the total at about £7.5 billion of redress (about £9.1 billion bill to firms) across roughly 12.1 million agreements.

The average works out to about £829 per agreement, with around one in three qualifying cases hitting a cap. Your own figure depends on the size, rate and term of your deal: a large, long, high-rate PCP will usually produce a larger number than a small, short, low-rate one.

Any figure you see is an estimate, not a promise — nobody is guaranteed a payout, and the amount depends on your own agreement. For a figure tied to your deal rather than a marketing claim, use the compensation estimator.

Key dates

The dates that matter are the ban, the ruling, the scheme confirmation, the opening waves and the consumer deadline. Treat the payout window as provisional until the FCA confirms each lender's start.

The legal challenge from 1 May 2026 is to the lawfulness of the scheme, not to whether redress is owed. The FCA is defending it as lawful, and free DIY complaints continue to run regardless. If the challenge changes the timeline, we will update this page.

How redress is worked out

Redress has two parts: the overpaid interest caused by the commission, plus interest on top to reflect the time you were out of pocket. A cap applies to roughly one in three qualifying cases.

Because the maths depends on your deal's size, rate and term, two neighbours with similar cars can receive very different figures. Any figure you see is an estimate, not a promise — nobody is guaranteed a payout, and the amount depends on your own agreement.

• Overpaid interest: the extra you paid because your rate was higher than it should have been.
• Interest on top (8% statutory-style rate): added because you were out of pocket since you paid the extra.
• Cap: about a third of qualifying agreements hit a limit set by the scheme rules.

How the scheme actually runs

Under the scheme, your lender writes to you if it identifies a qualifying agreement, sets out what it owes you, and pays unless you escalate. You don't have to wait to be contacted — a free complaint now keeps your place.

The two opening waves exist because the legal framework changed on 1 April 2014. Newer agreements (from that date onward) are assessed first, from 30 June 2026; earlier ones (6 April 2007 to 31 March 2014) follow from 31 August 2026. Either way, you keep the right to complain yourself at any time — see how to claim.

1. Your lender reviews its records against the scheme's eligibility test (DCA, high-commission arrangement, or undisclosed contractual tie).
2. The lender writes to you if your agreement qualifies, explaining the commission and the redress it calculates.
3. You either accept or query the figure — if you disagree, you escalate free to the Financial Ombudsman Service.
4. The lender pays the agreed redress, usually as a cash payment or a credit to a live agreement.