The FCA releases its update on the motor finance redress scheme, marking one of the most significant shifts in the motor finance landscape in years.
The FCA wants to set up an industry-wide compensation redress scheme to reimburse motor finance customers who were treated unfairly from 6 April 2007 to 1 November 2024. The scheme focuses on cases where lenders paid commission to brokers (or had contractual ties) but failed to disclose them adequately to consumers.
The redress scheme is expected to cover agreements with discretionary commission arrangements (DCAs), high commission levels, or exclusive contractual ties.
- The proposals estimate that 14.2 million motor finance agreements may be eligible for the scheme.
- The FCA expects about 85% take-up, giving an estimated redress liability of £8.2 billion (including interest). If all eligible consumers participated, redress could reach up to £9.7 billion.
- The average compensation per agreement is estimated at around £700.
Key dates
Complaints deadline extension: The FCA is consulting on extending the deadline for firms to issue final responses to motor finance complaints to 31 July 2026.
The consultation closes on 18 November 2025, and the FCA aims to publish final rules and launch the scheme in early 2026.
What are the implications for motor finance firms?
With questions already mounting around liability, remediation and customer impact, now’s the time to cut through the noise and understand what this means for your firm.
Join our webinar to understand the rules, risks and road ahead.
