FCA Motor Finance Redress Scheme: Current Position and Consumer Next Steps
Updated 6 September 2026. The UK Financial Conduct Authority (FCA) introduced its motor finance redress scheme on 30 March 2026, following consultation. It addresses unfair treatment involving undisclosed commission arrangements between lenders and brokers, usually car dealers. Parts of the scheme are now suspended following legal challenges. This update replaces the prospective account originally published in June 2025. Read the FCA’s scheme announcement and suspension update.
The Supreme Court’s Motor Finance Judgment
The Supreme Court decided the linked Hopcraft, Johnson and Wrench appeals on 1 August 2025, [2025] UKSC 33. The customers’ claims in tort and equity failed, but Mr Johnson succeeded under the unfair-relationship provisions in section 140A of the Consumer Credit Act 1974. Undisclosed or partly disclosed commission does not by itself establish an unfair relationship: the circumstances of the agreement matter. The Supreme Court’s official case summary explains the distinction between these legal claims.
Key Elements of the FCA’s Scheme
- Agreements and eligibility
The scheme covers relevant motor finance agreements from 6 April 2007 to 1 November 2024 where lenders paid brokers commission. It considers certain undisclosed discretionary commission arrangements, high commissions and contractual ties. Eligibility is subject to exceptions; holding a car finance agreement does not automatically mean compensation is due. See the FCA’s scope and eligibility criteria. - Legal challenge and payment timing
Parts of the scheme are suspended. Until the legal process ends, lenders do not need to calculate or pay compensation under the scheme. If it is upheld and there is no appeal, the FCA expects payments to start in 2027. This is conditional, not a guaranteed payment date; check the FCA’s current consumer guidance.
Consumer Guidance: Complaining Directly Is Free
Consumers concerned about their car finance can complain directly to their lender without paying a claims management company or law firm. The FCA provides lender contact details and a free template complaint letter. Its consumer campaign explains how to start a complaint without paying for representation.
A paid representative is not required to take part in the scheme. Before signing an agreement, understand its fees and check whether you already have representation. If you have already signed up, ending the agreement may involve charges. The FCA’s guidance on claims management companies explains these considerations.
What Firms Should Be Doing
The partial suspension does not remove all firms’ responsibilities. The FCA says firms must continue following the rules that remain in force, including identifying relevant agreements and complaints, gathering commission and disclosure records, and keeping complainants informed about the legal challenge. Brokers must respond to lenders’ requests for relevant information. The FCA’s information for firms sets out the remaining obligations.
What This Means for Consumers and Firms
Commission transparency and accurate records remain central to resolving motor finance complaints. Consumers can raise concerns with their lender now, while firms should check the obligations that still apply. Whether an individual agreement qualifies, and when any compensation may be paid, depends on the applicable rules and the outcome of the legal process.
References
- Supreme Court: official summary of [2025] UKSC 33 (1 August 2025).
- FCA: motor finance redress scheme announcement and updates.
- FCA: car finance claims and consumer guidance.
- FCA: information for firms on motor finance complaints.
This article summarises official material checked on 6 September 2026. The legal challenge and scheme timetable may change; use the linked FCA pages for subsequent updates.
For the latest position, see the FCA’s car finance claims guidance.
