- 12.1magreements eligible
- £829average per agreement
- 16 Feb – 3 Mar 2027legal challenge heard
- 31 Aug 2027last day to complain
Where the scheme is now
Updated 3 November 2026. We update this as the case moves.
- March 2026Scheme confirmed. For agreements from 6 April 2007 to 1 November 2024
- July 2026Payouts paused. While three lenders and a consumer group challenge the rules
- 16 Feb – 3 Mar 2027Full hearing. Lenders must still tell you by 18 November or 18 January if you’re not owed anything. Offers wait for the ruling.
- 2027Payments expected. Only if the scheme is upheld and that decision isn’t appealed
- 31 August 2027Last day to complain. If your lender hasn’t contacted you
What the scheme is
The Financial Conduct Authority confirmed its motor finance consumer redress scheme on 30 March 2026, in policy statement PS26/3. Lenders must review agreements where they paid the dealer or broker commission, and pay compensation where the arrangement was unfair and not properly disclosed.
It covers PCP and hire purchase taken out between 6 April 2007 and 1 November 2024, in two parts: agreements up to 31 March 2014, and agreements from 1 April 2014.
What makes commission unfair
Discretionary commission
The dealer could set your interest rate and earned more commission the higher it went. Banned from 28 January 2021.
High commission
At least 39% of the interest and charges, and at least 10% of the amount borrowed.
A tie to the lender
The lender had exclusivity or first refusal on the dealer’s customers, and you weren’t told.
How compensation is worked out
For most people it’s based on the commission paid and the FCA’s estimate of how much more it cost you, plus interest at the Bank of England base rate plus 1%, with a minimum of 3% a year. In the most serious cases the lender refunds all the commission, plus interest.
The legal challenge
CA Auto Finance, Mercedes-Benz Financial Services, Volkswagen Financial Services and the consumer group Consumer Voice have challenged the rules. On 2 July 2026 the Upper Tribunal suspended parts of the scheme, so no compensation is payable until the challenges are decided. The full hearing is from 16 February to 3 March 2027.
Deadlines
While the scheme is paused, lenders don’t have to work out or pay compensation, but they must still tell people who complained if they’re not owed anything: by 18 November 2026 (agreements from April 2014, complained about by 30 June 2026) or 18 January 2027 (older agreements, complained about by 31 August 2026). Offers wait for the ruling. If your lender hasn’t contacted you, you can complain until 31 August 2027. If a lender writes to you about the scheme, you have six months to reply.
Tax on your payout
Lenders take basic-rate tax off the interest part of any compensation. Most people can reclaim it from HMRC. How to get it back.
Sources
- FCA: FCA confirms motor finance redress scheme (30 March 2026)
- FCA: PS26/3 Motor finance consumer redress scheme
You do not need to use a claims management company to make your complaint. You can do this directly. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free.