Car finance redress
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.
Worked example
On a £14,000, 48-month PCP where an undisclosed DCA added about 3 points to the APR, the extra interest alone comes to roughly £1,100 to £1,150 on our calculator's maths, with a final balloon of 30% to 40%, before the scheme's method and any cap are applied. Under the scheme, that loss is estimated and averaged with the commission in most cases, interest on top is added at base rate plus 1% (at least 3% a year) for the years you were out of pocket, and the cap applies where the rules require it (about one in three cases). A smaller £5,000 HP over 24 months with modest undisclosed commission may produce only a few hundred pounds.
Redress estimate
Any figures here are an estimate, not a promise, and nothing on this page is financial or legal advice. You can claim free yourself — you don't need a claims firm.
The FCA motor finance consumer redress scheme is the regulator's plan to compensate people whose car finance carried hidden, high or discretionary commission between 6 April 2007 and 1 November 2024. It was confirmed on 30 March 2026 in Policy Statement PS26/3, and parts of it have been suspended by the Upper Tribunal from 29 June 2026 while a legal challenge is heard. Under the scheme rules, your lender checks each agreement for an undisclosed DCA, high-commission arrangement or contractual tie, then works out what you are owed plus interest on top, but until the legal process ends lenders do not need to calculate or pay redress. You can complain to your lender yourself, free and without a claims firm.
The FCA expects about £7.5 billion of redress at a 75% uptake rate (about £9.1 billion total bill to firms), across roughly 12.1 million agreements. Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement. Check your position with the compensation estimator. Below, we cover who qualifies, how redress is worked out and the key dates in a table.
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, the industry-wide scheme is designed to handle affected agreements consistently: every firm applies the same eligibility test and the same redress method.
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 checklist on am I eligible, or read about DCAs.
- Your agreement started in the 6 April 2007 to 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.
Excluded by design
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 undisclosed commission is a factor that, weighed with others such as its size and any hidden tie, can make the lending relationship unfair, although non-disclosure alone will not necessarily be enough. That finding 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 raise your interest 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.
One test, applied the same way everywhere
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.
Why there's no single average
Key dates
The dates that matter are the ban, the ruling, the scheme confirmation, the legal challenge and suspension, the hearing and the consumer deadline. Payouts are expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed, so treat any payout date as provisional.
The legal challenge from 1 May 2026 was brought by CA Auto Finance, Mercedes-Benz Financial Services, Volkswagen Financial Services and Consumer Voice, and its grounds include the FCA's power to make the scheme rules. The FCA is defending it as lawful. Until the legal process ends, lenders do not need to calculate or pay redress, but they must still tell people who are not owed money by 18 November 2026 for agreements from 1 April 2014 where you complained by 30 June 2026, or by 18 January 2027 for earlier agreements where you complained by 31 August 2026, subject to limited exceptions. If the scheme is quashed, complaints may go through a revised scheme or the normal complaints route. Free DIY complaints can still be made, and we will update this page when the timeline changes.
| Event | Date |
|---|---|
| DCAs banned by the FCA | 28 January 2021 |
| Supreme Court ruling | 1 August 2025 |
| FCA scheme finalised (PS26/3) | 30 March 2026 |
| Scheme legally challenged | 1 May 2026 |
| Complaint-handling pause ended | 31 May 2026 |
| Parts of the scheme suspended (Upper Tribunal order) | 29 June 2026 |
| Legal challenge to be heard | 16 February to 3 March 2027 |
| Consumer deadline (if not contacted) | 31 August 2027 (under the rules as made; may change) |
How redress is worked out
For most people, redress is the average of the estimated overpaid interest and the commission paid, 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: an estimate of the extra you paid, based on a 17% discount to your interest rate (21% for agreements before April 2014), averaged with the commission in most cases.
- Interest on top (base rate plus 1%): simple interest at the annual average Bank of England base rate plus 1%, with a 3% minimum in any year, 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 maths plays out
How the scheme is meant to run, and what is on hold
Under the scheme rules, your lender writes to you if it identifies a qualifying agreement, sets out what it owes you, and pays once you accept, but the steps that calculate and pay redress are suspended until the legal challenge ends. You don't have to wait to be contacted, because a free complaint now keeps your place.
The scheme rules set two timetables because the legal framework changed on 1 April 2014. The implementation period for newer agreements (from that date onward) ended on 30 June 2026, and for earlier ones (6 April 2007 to 31 March 2014) on 31 August 2026. With parts of the scheme suspended, the letters lenders must send for now are to people who are not owed money (see the key dates above). Either way, you can still complain yourself, as set out in how to claim.
- Your lender reviews its records against the scheme's eligibility test (DCA, high-commission arrangement, or undisclosed contractual tie).
- The lender writes to you if your agreement qualifies, explaining the commission and the redress it calculates.
- You either accept or query the figure, and if you disagree, you can escalate free to the Financial Ombudsman Service.
- The lender pays the agreed redress within one month of you accepting, if the suspended steps resume.
You don't have to wait for a letter
Why the scheme is capped for some
About one in three qualifying agreements hits a cap, set deliberately to keep the scheme workable for firms and fast for consumers. The cap is a trade-off for speed and consistency.
Without a cap, firms might contest large numbers of cases individually, dragging the process out for years. By capping the top slice of payouts, the FCA made the scheme affordable enough for lenders to operate at scale. The FCA says taking part in the scheme is likely to be simpler and more certain than taking a claim to court, although its payment steps are suspended for now.
The cap only applies to a minority of cases. For roughly two in three qualifying agreements, the cap does not reduce the figure worked out under the standard method. Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement.
Estimate and how to claim
You don't have to wait to act, and you don't need a claims firm. Estimate first, then complain for free.
Use the compensation estimator, then follow how to claim. Claiming is free and you can do it yourself: complain to your lender first, then escalate to the Financial Ombudsman Service. You do not need a claims-management company taking a cut. The free DIY route runs in parallel with the scheme, so there is no reason to wait for a letter or pay a claims firm to "get in early."
How the scheme and a DIY complaint fit together
The scheme and a free DIY complaint run in parallel, so you don't choose one or the other. A complaint you send now keeps your place in the queue for whatever the scheme pays.
If you complain to your lender today, the lender has to log it. If the scheme's payment steps resume (payouts are expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed), your complaint is already in the system. You don't lose anything by acting early, and you don't gain anything by paying a claims firm to "get in early."
Either way, the same eligibility test and the same redress method apply. The only thing a claims firm changes is how much of any payout you keep.
Why the scheme exists instead of individual court cases
An industry-wide scheme is faster and fairer than millions of separate court cases. It applies one consistent set of rules instead of leaving each borrower to prove their case alone.
After the Supreme Court's August 2025 ruling, lenders faced the prospect of defending huge numbers of individual claims, each taking years. The FCA's scheme replaces that with a structured process: one eligibility test, one redress method, and set timelines. That's better for consumers (faster, free, consistent) and better for firms (predictable cost).
The trade-off is that the scheme caps redress in about one in three cases, to keep it affordable. On balance, most people are better off under the scheme than fighting alone, because it is free and applies one consistent test.
Frequently asked
What is the FCA car finance redress scheme?
Do I qualify for the scheme?
How much could the scheme pay out?
What are the key dates?
Has the scheme been challenged?
How does the scheme actually pay me?
What counts as a high-commission arrangement?
Will the cap reduce my payout?
Can I still complain while the scheme is on hold?
Sources
We cite regulators and official UK sources only.
- Financial Conduct Authority — motor finance redress schemefca.org.uk
- UK Supreme Courtsupremecourt.uk
- Consumer Credit Act 1974legislation.gov.uk
- Financial Ombudsman Servicefinancial-ombudsman.org.uk
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