FCA Motor Finance Redress Scheme 2026: Everything You Need to Know

Latest: Consumer Voice's Upper Tribunal challenge (23rd April 2026)

On 23rd April 2026, the advocacy group Consumer Voice filed a notice of appeal at the Upper Tribunal challenging PS26/3. The challenge disputes the FCA's use of Johnson v FirstRand Bank Ltd [2024] UKSC as the benchmark for redress and argues that the “hybrid” commission-calculation method leaves most complainants outside the scope of full commission compensation. Their objection deadline is Sunday 27th April 2026.

Does this affect my complaint?

No. You should still complain now, and you should still complain even if the Tribunal rules against PS26/3. Martin Lewis (Money Saving Expert) has publicly urged consumers to keep going regardless of the outcome. Here is why:

• The scheme is live. PS26/3 remains in force pending any Tribunal ruling. Lenders are required to process complaints against it. Submitting now preserves your position.
• If the Tribunal amends the scheme to be more generous (Consumer Voice's goal), your complaint is already in the system and can be recalculated under the new rules.
• If the Tribunal leaves the scheme unchanged, your complaint proceeds on the original PS26/3 basis with no delay.
• If the Tribunal narrows the scheme, you remain eligible under whatever version was in force at the date you submitted, so earlier is better than later.

What Consumer Voice is arguing

In plain English: PS26/3's “hybrid” formula pays consumers the excess commission above what would have been typical, benchmarked against the Supreme Court's Johnson v FirstRand ruling. Consumer Voice argues that benchmark is too narrow. They want redress calculated against the total undisclosed commission rather than only the excess above a market norm, which would bring many more consumers into full compensation rather than partial.

What we're doing

Letters generated through EvenStance for PS26/3 complaints now include a short caveat noting the scheme is subject to an Upper Tribunal challenge. This does not change the legal basis of the complaint; it just signals to the firm that the calculation method may be revised, so they should not rely on PS26/3 settlements as final resolution. If the Tribunal rules in Consumer Voice's favour, we'll publish a follow-up explainer on how to ask for a recalculation.

For the regulator's own statement see the FCA's PS26/3 hub. For the consumer view, MSE's car-finance reclaim page is regularly updated.

What happened

Between 2007 and 2024, millions of UK car buyers were overcharged on their PCP and Hire Purchase finance deals. Dealers who arranged the finance could set your interest rate within a range provided by the lender, the higher they set it, the more commission they earned. You were never told. In August 2025, the Supreme Court confirmed that these arrangements broke the law where consumers were not properly informed. On 30th March 2026, the FCA published PS26/3, the final rules for a mandatory, industry-wide compensation scheme.

How big is this?

This is the largest consumer compensation event in UK financial services since PPI.

The numbers: £7.5 billion in total estimated redress, covering 12.1 million finance agreements, with an average payout of £829 per agreement. The total cost to firms, including administration, is £9.1 billion.

Millions of claims will be settled in 2026. The vast majority will be completed by the end of 2027.

The two scheme periods

The FCA has split the scheme into two periods. This is deliberate, if the older period faces a legal challenge, compensation for newer agreements will not be delayed.

Scheme 2 (newer agreements): Covers finance agreements from 1st April 2014 to 1st November 2024. The implementation period ends on 30th June 2026. Lenders must notify existing complainants within 3 months (by 30th September 2026) and proactively contact consumers who are likely owed money within 6 months (by 31st December 2026).

Scheme 1 (older agreements): Covers finance agreements from 6th April 2007 to 31st March 2014. The implementation period ends on 31st August 2026. Lenders must notify existing complainants within 3 months (by 30th November 2026) and proactively contact consumers who are likely owed money within 6 months (by 28th February 2027).

If you are not contacted by a lender under either scheme, you have until 31st August 2027 to make a claim.

Who qualifies

The scheme covers you if you had a PCP or Hire Purchase car finance agreement between 6th April 2007 and 1st November 2024, and you were not clearly told about at least one of three things:

Discretionary Commission Arrangement (DCA). The dealer or broker had the power to adjust your interest rate within a range set by the lender. The higher they set it, the more commission they earned. This was the most common arrangement and the one that triggered the Supreme Court ruling. DCAs were banned by the FCA on 28th January 2021, but millions of agreements made before that date included one.

High commission. Even without a DCA, if the commission on your deal was at least 39% of the total cost of credit AND at least 10% of the loan amount, and you were not told, you qualify. This catches fixed-commission arrangements where the amount was excessive relative to what you were paying.

Contractual ties. If the dealer was contractually required to use one specific lender or give a lender first refusal, limiting your options without your knowledge, that is a separate unfairness trigger. There is an exception for visible manufacturer-franchised dealer relationships (e.g. a BMW dealership openly offering BMW Financial Services), but undisclosed exclusive arrangements are covered.

Who does not qualify

The scheme has specific exclusions:

Zero APR / zero-interest finance. If you paid no interest, the commission structure did not cost you anything. You are not eligible.

Minimal commission. If the total commission on your deal was £150 or less (for agreements from April 2014 onwards) or £120 or less (for earlier agreements), you are excluded. The FCA considers these amounts too small to have materially affected your costs.

Lowest 5% APR offerings.Approximately 64,000 agreements where the consumer received a rate in the bottom 5% APR for that lender's equivalent product type are excluded, on the basis that they got a competitive deal regardless of the commission arrangement.

High-value loans. Agreements above the 99.5th percentile by loan value for their origination year are excluded. This is a mass-market scheme, not designed for prestige vehicle financing. These consumers can still complain to their lender and the Financial Ombudsman separately.

Already resolved. If your complaint has already been determined by the Financial Ombudsman, decided by a court, or you have already accepted redress for the same issue, you are not eligible under the scheme.

How much will you get?

The average payout is £829 per agreement. But the actual amount depends on your specific deal.

The standard (“hybrid”) remedy applies to most cases. The FCA calculates an average of your estimated financial loss and the commission the broker received, adjusted for the difference between the rate you were charged and a benchmark APR. The adjustment factor is 17% for agreements from April 2014 onwards, or 21% for earlier agreements. Compensation is capped at the lowest of: 90% of the commission, the adjusted credit cost, or the actual credit cost. Approximately 1 in 3 cases will be capped.

The top-tier remedy applies to approximately 90,000 consumers who had undisclosed DCAs or tied arrangements combined with very high commission, at least 50% of the total credit cost AND at least 22.5% of the loan amount. These consumers receive a full refund of all commission plus interest.

Interest on compensation is calculated at the Bank of England base rate plus 1% per annum, with a minimum floor of 3%. This runs from the date of your overpayments to the date of compensation.

Key deadlines

Complaining before the implementation deadline puts you at the front of the queue. Lenders must assess existing complainants within 3 months of the scheme opening, but have 6 months to proactively reach out to those who have not complained.

The CMC question

You do not need a claims management company. The FCA designed this scheme for direct consumer access.

CMCs typically charge 25 to 30% of your compensation. On the average payout of £829, that is approximately £200 to £250, for accessing something that is free. The FCA has been unusually blunt about this: they have removed or amended over 800 misleading CMC and law firm advertisements, helped more than 28,000 consumers exit CMC contracts free of charge, and established a joint enforcement taskforce with the Solicitors Regulation Authority, Advertising Standards Authority, and Information Commissioner's Office.

The FCA's own words: “If you use [a CMC], you could lose over 30% of any money you get.”

If you want help navigating the process without paying a percentage, EvenStance offers free PCP assessments and complaint support. See our guide: PCP Claims Without a CMC.

What to do now

Step 1: Identify your lender. Check your original paperwork, bank statements, or credit file.

Step 2: Complain directly to the lender. You can do this now, before the scheme formally opens. Complaining early means faster processing.

Step 3: Keep records. Note the date you complained, the reference number, and any response.

Step 4: If rejected, do not accept the rejection at face value. Lender rejections are often the starting point, not the end. Check whether the rejection actually addresses your specific complaint grounds.

Step 5: Escalate if needed. The Financial Ombudsman Service reviews disputes free of charge.

Or, let Frank do it. EvenStance's AI assesses your eligibility, drafts your complaint letter citing the relevant law and scheme rules, tracks your deadlines, and guides escalation if needed. Completely free for PCP and HP motor finance claims.