FCA Car Finance Redress Scheme Explained (2026)
Scheme status (updated 5 August 2026): parts of the FCA motor finance redress scheme are temporarily suspended while the Upper Tribunal considers legal challenges. Lenders do not currently have to calculate or pay compensation under the scheme, the original decision and payment dates no longer apply, and no payment under the scheme is guaranteed. If the scheme proceeds, first payments are expected in 2027 at the earliest. Any dates mentioned below were set before the suspension.
On 30 March 2026 the FCA confirmed its nationwide motor finance redress scheme — the biggest consumer compensation programme since PPI. Named PS26/3, the scheme requires lenders to assess every eligible car finance agreement and automatically pay compensation to affected customers. This guide explains how it works, what you could receive, and what to do right now.
In this guide
- What Is the FCA Redress Scheme?
- Why Does the Scheme Exist?
- Two Schemes — Which One Covers Your Agreement?
- What Types of Agreements Are Covered?
- How Is Compensation Calculated?
- What You Should Do Right Now
- Frequently Asked Questions
- Related Guides
- Our Partner's Fees Explained
- Think You May Have a Motor Finance Claim?
What Is the FCA Redress Scheme?
The FCA motor finance redress scheme is a free, nationwide compensation programme introduced by the Financial Conduct Authority (FCA) to address the widespread mis-selling of car finance agreements. It covers PCP and HP agreements where dealers were paid undisclosed commissions between April 2007 and November 2024.
The scheme was formally confirmed on 30 March 2026 in FCA Policy Statement PS26/3. The total amount lenders are expected to pay out is approximately £7.5 billion, with an average compensation payment of £829 per eligible agreement plus interest.
Why Does the Scheme Exist?
Before January 2021, many car dealers were paid commission by lenders in ways that were not properly disclosed to customers. Dealers could set the customer’s interest rate within a range — and the higher the rate, the more commission the dealer earned. The customer was told nothing about this conflict of interest.
Investigations by the FCA and landmark court cases including Johnson v FirstRand Bank (MotoNovo) and Hopcraft v Close Brothers established that this practice was unlawful. The FCA confirmed that many lenders broke consumer protection laws and its own disclosure rules. The PS26/3 scheme is the formal mechanism to put that right.
Two Schemes — Which One Covers Your Agreement?
The FCA split the scheme into two time periods to protect payments from being delayed if legal challenges arise:
| Scheme 1 — agreements from April 2014 | Scheme 2 — agreements before April 2014 | |
|---|---|---|
| Priority complaint deadline | 30 June 2026 | 31 August 2026 |
| Decision deadline | 30 September 2026 | 30 November 2026 |
| Payment deadline | November 2026 | January 2027 |
Original timetable, set before the 2 July 2026 suspension — these dates no longer apply as stated. | Lender outreach deadline | December 2026 | February 2027 |
Under the original timetable, complaining before the scheme opened placed you in the priority group, with a decision within 3 months and payment within 1 month of accepting an offer. Those dates are suspended; if the scheme resumes, new timescales will apply.
What Types of Agreements Are Covered?
- Covered: Personal Contract Purchase (PCP) agreements
- Covered: Hire Purchase (HP) and conditional sale agreements
- Covered: Cars, vans, motorbikes and campervans financed through a dealer or broker
- Covered: Personal use, or sole trader use with a loan under £25,000
- NOT covered: Personal Contract Hire / leasing agreements
- NOT covered: Finance arranged by a limited company
- NOT covered: Interest-free (0% APR) deals
- NOT covered: Agreements signed on or after 1 November 2024
The Three Types of Mis-Selling the Scheme Covers
- Discretionary Commission Arrangements (DCAs)
The dealer could adjust your interest rate and earned more commission the higher they set it. DCAs were banned in January 2021 and are the most common ground — affecting around 40% of all eligible agreements. See our full guide: What Is a DCA?
- Unfairly High Commission
Where the commission was at least 39% of the total cost of credit AND 10% of the loan amount, it may have been unfairly high. Affects approximately 2.9 million agreements.
- Contractual Ties
Where a lender had exclusivity arrangements with certain dealers. Affects approximately 3.2 million agreements. Where only contractual ties apply, compensation is typically lower.
Small commissions are excluded: under £120 pre-April 2014, under £150 post-April 2014.
How Is Compensation Calculated?
For most people the FCA uses a Hybrid Remedy — the average of:
- Estimated overpaid interest: 17% APR adjustment for post-April 2014 agreements, 21% for pre-April 2014
- The total commission paid by the lender to the dealer
Interest is added at Bank of England base rate plus 1%, minimum 3% per year, from the date you overpaid to the date you are paid.
A small number of cases receive the Johnson Remedy — full commission repayment plus interest with no cap. Around 90,000 agreements qualify. See: The Johnson Remedy Explained
What You Should Do Right Now
- Complain to your lender now — it is free and your complaint is logged and queued if the scheme resumes
- If you have already complained and received an acknowledgement, wait for your lender to contact you
- If your complaint was previously rejected, re-submit under the expanded three-part criteria
- You do not need a claims company or solicitor — but if you want help, Claims Bible’s partners work on a no win, no fee basis. See our fees page
Frequently Asked Questions
Is the FCA scheme really free?
Yes, completely free. You can complain directly to your lender and escalate to the Financial Ombudsman Service for free if your complaint is rejected. A claims company or solicitor is optional — they will charge a fee if successful.
When will I actually receive money?
Under the original timetable: post-2014 agreements — complain before 30 June 2026, decision by September 2026, paid by November 2026; pre-2014 agreements — complain before 31 August 2026, decision by November 2026, paid by January 2027. These dates are suspended and no longer apply as stated.
What if I had multiple car finance agreements?
Each eligible agreement is a separate claim and a separate potential payout. Claims Bible can trace all your historic agreements — contact us for a free check.
What if my lender has gone bust?
Different rules apply depending on what happened to the lender. See our full guide:
What If Your Lender Has Gone Bust?
Should I use the FCA scheme or go to court?
For most people, the FCA scheme is the right choice. See our full comparison:
Related Guides
What Is a Discretionary Commission Arrangement (DCA)?
What If Your Lender Has Gone Bust?
Claim on Behalf of Someone Who Has Died
Already Signed Up With a Claims Company?
Back to Car Finance Claims Hub
Think You May Have a Motor Finance Claim?
The FCA estimates average compensation of around £830 per eligible agreement, but eligibility and payment amounts vary. Some customers may receive nothing. Complaints about agreements started from 1 April 2014 should be submitted by 30 June 2026 to be considered under the earlier timetable. Different dates apply to older agreements. The scheme is currently subject to legal challenge, so dates and payment timings may change.
