What happened
If you took out motor finance between 6 April 2007 and 1 November 2024, you may be owed money. That is the short version.
The longer version starts with Discretionary Commission Arrangements, or DCAs. These were agreements between car finance lenders and the brokers or dealers selling loans, where the broker could adjust the interest rate on your deal to earn a higher commission. The higher the rate they set, the more they were paid. You were not told about this. The FCA banned DCAs in 2021.
The FCA reviewed around 32 million agreements and found that, in cases involving DCAs, there was no evidence that customers had been told about the commission arrangement. In August 2025, the Supreme Court ruled that hidden commission alone did not automatically make an agreement unfair, but it did find one arrangement unfair because the commission charged was 55% of the cost of credit and misleading information had been given to the customer.
On 30 March 2026, the FCA published Policy Statement PS26/3 and confirmed a Motor Finance Consumer Redress Scheme, describing it as the quickest and most cost-effective way to deliver fair compensation at scale. The FCA concluded that the arrangements in question created unfair relationships under the Consumer Credit Act 1974.
However, on 2 July 2026, the Upper Tribunal partially suspended parts of the scheme following legal challenges from four commercial parties, including Volkswagen Financial Services and Mercedes-Benz Financial Services. The Tribunal is scheduled to hear the case in December 2026 or February 2027, depending on whether further evidence is requested. Lenders are not currently required to calculate or pay compensation. If the scheme survives without further appeal, first payments are expected in 2027.
Who it affects
The scheme covers consumers who entered a motor finance agreement with an FCA-regulated lender, or a firm previously licensed by the Office of Fair Trading, between 6 April 2007 and 1 November 2024.
Three types of commission arrangement are in scope: a discretionary commission arrangement; high commission, defined as commission equal to or exceeding 35% of the total cost of credit and 10% of the loan amount; and contractual ties giving the lender exclusivity or a right of first refusal.
The FCA has deliberately tightened the eligibility criteria. Agreements involving minimal commission or a 0% APR deal will not qualify. The scheme is split into two parts: Scheme 1 covers 6 April 2007 to 31 March 2014, and Scheme 2 covers 1 April 2014 to 1 November 2024. The split is designed to protect Scheme 2 consumers from delays if legal challenges are raised to Scheme 1.
Leasing agreements are not included. The FCA confirmed this in December 2025. If you have seen adverts suggesting otherwise, be cautious.
The FCA projects the total redress at approximately £7.5 billion across all eligible consumers. That is the regulator’s own projected figure for the scheme as designed, not an independently audited number. Individual outcomes will vary.
Motor Mike analysis
Let me be straight with you. This scheme is real, it is free to use, and if you had a qualifying finance agreement you should check whether you are eligible. But there are two things to keep in mind.
First, this is not settled yet. The Upper Tribunal suspension means nothing is guaranteed. The legal hearing is due by February 2027 at the latest, and until a judgment lands and any appeal period passes, lenders are not paying out. Anyone telling you a payout is imminent or certain is getting ahead of the facts.
Second, and I cannot say this clearly enough: you do not need to pay anyone to make this claim. The FCA has put this in writing. Accessing compensation is free, and people do not need to use a claims management or law firm to get what they are owed. If you use a claims management company, you may hand over more than 30% of any payout in fees. The FCA has seen some consumers signed up with four different representatives for the same claim, meaning four lots of fees potentially taken from one payout.
The FCA has opened an enforcement investigation into The Claims Protection Agency Limited, which trades under names including My Claim Group, Martin’s Tips, Karen’s Claims, Express PCP and The PCP Guys. The concerns include what customers were told about potential redress and whether they were informed they could claim for free. The FCA has also warned consumers about a growing number of adverts that appear to offer independent tips but are in fact paid promotions from claims firms.
If you get a cold call, text or email claiming you are owed money, treat it with suspicion. Report nuisance contacts to the Information Commissioner’s Office.
The free complaint process is straightforward. You go directly to your lender. The FCA website lists contact details and explains what to say. That is the whole job.
What is still unclear
The outcome of the Upper Tribunal hearing is not known. If the scheme is upheld and not appealed further, payments could start in 2027. If it is struck down or significantly changed, the timeline and eligibility rules could shift.
The split structure means Scheme 1 customers (pre-April 2014 agreements) may face longer waits than Scheme 2 customers regardless. Under the original timetable, lenders were supposed to contact Scheme 2 customers by the end of 2026 and Scheme 1 customers by February 2027, but those dates no longer apply while the suspension is in place.
The FCA’s £7.5 billion total figure is a projection based on the scheme as designed. It should be treated as indicative rather than guaranteed.
What to do now and what to watch next
Check your records. Find any motor finance paperwork from 6 April 2007 onwards, including hire purchase and PCP agreements. Note the lender’s name.
Complain directly to your lender for free. Visit the FCA’s guidance page for lender contact details and step by step instructions. You do not need a claims firm. Do not pay anyone a percentage of your compensation to do something you can do yourself at no cost.
Do it before 31 August 2027. That is the current deadline for consumers to submit complaints if their lender has not already contacted them.
Do not sign up with a claims management company. If you already have, check what fees you agreed to and whether you can withdraw before any payout is made. The FCA and the Solicitors Regulation Authority have jointly warned about poor practices in this area.
Watch for the Tribunal judgment. The hearing is due by February 2027 at the latest. Once a decision lands, the FCA will update its guidance. Check back here and on the FCA legal challenges page for developments.
Leasing agreement holders: you are not included in the scheme, regardless of what any advert may suggest.
The money is potentially real. So is the deadline. But so is the legal uncertainty, and so is the army of claims firms trying to take a cut of your payout for doing nothing you cannot do yourself. Keep your paperwork handy, complain to your lender directly, and wait for the Tribunal result before making any assumptions about when or how much you will receive.
