Car Finance Claims News & Redress Updates

What's happening now

As of 28 October 2026, parts of the FCA's motor finance redress scheme are suspended while its lawfulness is challenged in court. Until the legal process ends, lenders do not need to calculate or pay compensation under the scheme. Nothing has been cancelled, and the free DIY route carries on whatever happens.

The scheme is made but partly on hold: PS26/3 set an implementation period running to 30 June 2026 for agreements from 1 April 2014 onward and to 31 August 2026 for the earlier 2007 to 2014 deals, but the Upper Tribunal suspended parts of it with effect from 29 June 2026, so lenders do not need to calculate or pay compensation until the legal process ends. It is under legal challenge (since 1 May 2026), which the FCA says it will defend "robustly as lawful", and the hearing is set for 16 February to 3 March 2027. Payouts are expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed; if the scheme is quashed, the FCA may consult on a revised scheme or tell lenders to handle complaints through the usual complaints process. And the free DIY route hasn't changed: complain to your lender whenever you like and keep 100% of anything you're owed.

If you took out car finance between 6 April 2007 and 1 November 2024 through a dealer or broker, you could be in scope. Start with the scandal explained, then the full dated timeline.

Latest developments

The motor finance redress story keeps shifting. These are the milestones that matter, newest first. We refresh the list whenever the FCA publishes an update or a court date moves.

Every entry is dated and sourced. For the full run from the 2007 start of the window through to the suspension and the hearing set for 16 February to 3 March 2027, see the canonical redress timeline.

• 2 July 2026: Parts of the scheme suspended. The FCA announces that the Upper Tribunal has suspended parts of the scheme, with effect from 29 June 2026, on terms agreed with the challengers. Until the legal process ends, lenders do not need to calculate or pay compensation, though they must still tell some people that they are not owed money. On 13 October 2026 the FCA confirmed the hearing dates, and on 26 October 2026 the Tribunal extended them to 16 February to 3 March 2027. Source: FCA statements (2 July, 13 October and 26 October 2026).
• 31 May 2026: Complaint-handling pause ends. The pause on handling motor finance commission complaints, in place since 11 January 2024, expires. Source: FCA statement.
• 1 May 2026: Scheme legally challenged. The FCA confirms the scheme has been challenged and says it will defend it as lawful. The challenge was brought by CA Auto Finance, Mercedes-Benz Financial Services, Volkswagen Financial Services and Consumer Voice. Its grounds include the FCA's power to make the rules and the scheme's presumptions of unfairness and loss, and Consumer Voice argues the scheme is too favourable to lenders. On 8 May 2026 the FCA set out its expectations of firms after the challenge in a separate statement. Source: FCA statements (1 May and 8 May 2026).
• 30 March 2026: Scheme finalised (PS26/3). The FCA confirms the motor finance consumer redress scheme: an estimated ~£7.5bn of redress across roughly 12.1 million agreements, averaging about ~£829 per agreement. Source: FCA, Policy Statement PS26/3.
• 1 August 2025: Supreme Court ruling. The UK Supreme Court rules that undisclosed motor finance commission can make the lending relationship unfair under section 140A of the Consumer Credit Act 1974. That ruling paved the way for an industry-wide scheme. Source: Supreme Court of the United Kingdom (supremecourt.uk).
• 28 January 2021: DCAs banned. The FCA bans new discretionary commission arrangements, the clearest conflict in the whole scandal. Source: FCA.

What the scheme means for you

If your car finance between 6 April 2007 and 1 November 2024 carried an undisclosed discretionary commission, a high-commission arrangement or a contractual tie, this scheme is your route to redress. It applies the same test across every firm.

The scheme homes in on three specific disclosure failures (set out in PS26/3): an undisclosed DCA, an undisclosed high-commission arrangement (commission at least 39% of the total cost of credit and at least 10% of the loan), or an undisclosed contractual tie. 0% and minimal-commission deals are out. Run through the checklist on am I eligible.

Redress centres on the extra interest you paid because of the commission, plus interest on top, and a cap bites on roughly one in three qualifying agreements. Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement.

How to claim (free)

You can claim for free, yourself, in two steps. Complain to your lender first; if you don't like the answer, take it to the Financial Ombudsman Service. No claims-management company needs to take a cut.

A claims-management company (CMC) can take up to about 36% of whatever you get back. On the scheme average of around ~£829 per agreement, that's roughly £300 gone; on a larger payout it climbs in step. Doing it yourself keeps the full 100%, and there's nothing a CMC can file that you can't file yourself.

Follow the steps on how to claim, and use our free letter template to write to your lender. The whole route costs you nothing.

The legal challenge, explained

On 1 May 2026 the FCA confirmed its redress scheme had been legally challenged, and said it would defend it "robustly as lawful." The challenge goes to the FCA's power to make the rules and to the scheme's presumptions of unfairness and loss, and parts of the scheme have been suspended while it is decided.

The legal process (a review of the scheme's rules by the Upper Tribunal, due to be heard from 16 February to 3 March 2027) will decide when bulk payouts could begin and whether they come through this scheme. Until it ends, lenders do not need to calculate or pay compensation under the scheme, and payouts are expected in 2027 at the earliest, if the scheme is upheld and the judgment is not appealed. If the scheme or parts of it are quashed, the FCA may consult on a revised scheme or tell lenders to handle complaints through the usual complaints process. The Supreme Court's August 2025 ruling still stands: undisclosed commission can make the relationship unfair under section 140A of the Consumer Credit Act 1974, though non-disclosure alone will not necessarily be enough. Nothing has been cancelled, and free DIY complaints keep running regardless.

If the challenge shifts the timeline or the rules, the FCA will publish new dates and we'll update this page. Read more on the FCA scheme and when claims will be paid.

Watch-outs: scams and high-fee claims firms

Where there's a large, high-profile scheme, scams and high-fee claims firms follow. The FCA and Action Fraud have repeatedly warned about cold calls, fake "official" letters and upfront-fee offers.

We run no claims, so you can't claim "through us". Any figure you see is an estimate, not a promise. Nobody is guaranteed a payout, and the amount depends on your own agreement.

• No real scheme asks for an upfront fee. If someone wants payment before you get redress, treat it as a red flag.
• The FCA never cold-calls about your car finance. A genuine firm contacting you will be your lender, named on your agreement.
• CMCs can charge up to about 36% of any payout. If you DIY, you keep that money in full.
• Ignore 'act now before the deadline' pressure. If no firm contacts you, the consumer deadline is 31 August 2027 under the scheme rules as made, which may change after the legal challenge, and it is not a 'closing soon' countdown.