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The FCA is launching an industry-wide motor finance redress scheme in late March 2026. It covers approximately 14 million agreements and could pay out an estimated £8 billion in total compensation. Average awards are expected to be around £700 per agreement — but many customers will receive more. Here is everything you need to know.
Check whether you qualify for a mis-sold car finance claim.
For years, car finance customers across the UK were charged more than they should have been, because dealers were earning hidden commissions that influenced their interest rates. The FCA's investigation confirmed that this practice — known as discretionary commission arrangements, or DCAs — was widespread, systemic, and in breach of consumer protection rules.
The result is one of the largest consumer financial redress schemes in UK history. The scheme is designed to be accessible: you do not need a lawyer or a claims management company to participate. You can submit a complaint directly to your lender, or use a specialist service like PCP Missold to handle the process for you.
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What Is the Motor Finance Redress Scheme?
The motor finance redress scheme is a formal compensation programme being introduced by the Financial Conduct Authority. It requires lenders to proactively identify customers who were affected by hidden commission arrangements and to make compensation offers to those customers — without waiting for individual complaints in every case.
The scheme covers PCP and HP agreements taken out between 6 April 2007 and 1 November 2024. It is industry-wide, meaning it applies to all regulated motor finance lenders who operated DCA arrangements during that period.
The FCA published its consultation on the scheme in October 2025. Final rules are expected by end of March 2026, at which point lenders will begin a three to five month implementation period before starting to process claims.
Who Is Eligible for the Redress Scheme?
You are likely eligible if:
- You financed a car, van, motorbike, campervan or other motor vehicle on a PCP or HP agreement (not a lease).
- The agreement was taken out between 6 April 2007 and 1 November 2024.
- The finance was arranged through a dealer or broker.
- There was a commission arrangement between the dealer and the lender that was not properly disclosed to you.
Understand how hidden commission works.
Not every agreement will automatically result in a payout. The FCA scheme requires each agreement to be assessed individually. However, given the breadth of the investigation findings, the majority of agreements from the DCA era (2007 to 2021) are expected to qualify.
Check If You're Owed £1,000s | Mis-Sold Car Finance Claim | PCP Claim Experts
How Much Compensation Could You Receive?
The FCA has estimated an average payout of £700 per eligible agreement. This figure includes both the refund of excess interest paid and additional interest calculated at the Bank of England base rate plus 1% per year, running from the date of the original overpayment to the date compensation is paid.
The actual amount varies considerably depending on the size of your loan, the interest rate you were charged compared to a fair rate, and the length of your agreement. Customers with large PCP agreements on high-value vehicles may receive substantially more than the average.
If you had multiple car finance agreements during the eligible period, you may be entitled to a separate award for each one. This is particularly common among customers who changed their car every two to three years throughout the eligible period.
Calulate your estimate with our free calculator.
How Does the Scheme Work in Practice?
Once the FCA publishes final rules (expected end of March 2026), the scheme will proceed in the following stages:
- Implementation period: Lenders will have three months (up to five months for older agreements) to prepare their systems, identify affected customers, and calculate redress amounts.
- Outreach: Lenders will write to eligible customers with their redress assessment and a compensation offer.
- Acceptance: Customers can accept the offer immediately. There will be a clear process for disputing the amount if you believe you are owed more.
- Payment: Compensation is paid after acceptance.
If you have already submitted a formal complaint to your lender, you will be notified of any redress within three months of the implementation period ending. This is why submitting a complaint now, ahead of the scheme launch, is strongly recommended.
View the Timeline of the FCA Investigation.
Do You Need a Claims Firm?
The FCA is clear: you do not need to use a claims management company (CMC) or solicitor to access compensation through the redress scheme. You can complain directly to your lender at no cost.
The FCA has also warned consumers that using a CMC could cost up to 30% of any compensation you receive. On a £700 average award, that is £210 in fees. On a larger award, the cost is proportionally higher.
That said, many customers find the process easier with professional support — particularly when dealing with multiple agreements, lenders that have changed ownership, or complex credit histories. PCP Missold operates on a no-win no-fee basis with a clearly capped fee, ensuring you keep the substantial majority of your compensation.
Check If You're Owed £1,000s | Mis-Sold Car Finance Claim | PCP Claim Experts
What Should You Do Right Now?
The single most important step you can take today is to submit a formal complaint to your car finance lender. Customers who have complained before the scheme launches will be prioritised and contacted first once the scheme opens.
If you are unsure how to complain, or if you do not have your original finance documents, PCP Missold can manage the entire process. We know which information lenders require, how to submit Subject Access Requests, and how to frame a complaint to maximise its effectiveness under the FCA scheme.
The redress scheme window will not be open indefinitely. Acting now means your claim is in the queue from day one.
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