Mis-Sold Car Finance UK: Are You Owed £830? The FCA Redress Scheme Explained (2026)

Millions of UK drivers were overcharged interest on car finance without knowing why. The FCA thinks around 12.1 million agreements may be in scope for compensation, at an average of roughly £830 each.

This page is a walk-through of the FCA redress scheme: who qualifies, how the payout is worked out, why the scheme is currently paused after a July 2026 Upper Tribunal decision, and the exact five-step claim you can file yourself, for free, the moment the pause ends. It is general information for England and Wales, not personal financial or legal guidance.

Why the scheme is currently paused

On 2 July 2026, the Upper Tribunal (Tax and Chancery Chamber) partially suspended the FCA scheme after a legal challenge from motor finance lenders. The FCA confirmed on its website that firms in scope no longer have to calculate compensation or pay eligible customers while the case is heard.

The tribunal has provisionally scheduled the hearing for 14 to 18 December 2026, and if that date cannot be used, 16 February 2027. If the scheme is upheld and not appealed, the FCA expects payments to begin during 2027. The consumer-facing scope, the commission set-ups covered, the eligibility window, and the FCA compensation formula have not changed. The pause is on lenders being forced to run them, not on the rules themselves.

In plain English: the scheme still exists on paper, but until the tribunal has ruled and any appeals are done, lenders do not have to do anything. Complaints are still worth filing because they hold your place in the queue, they preserve any time-limit deadlines, and they force the lender to log the complaint. If the scheme goes ahead, you are already in the process. If it is overturned in some way, the individual complaint under the Financial Ombudsman route is still open.

What the FCA scheme actually is

The scheme is a formal consumer redress scheme made under the Financial Services and Markets Act 2000. It requires certain firms in the motor finance market to review historical agreements, work out whether the customer was overcharged because of an undisclosed commission set-up, and pay compensation where they were.

The FCA Policy Statement PS26/3 confirmed the final scheme rules in March 2026, after two consultation rounds. The scheme covers regulated hire purchase agreements, personal contract purchase (PCP), and other regulated conditional-sale car finance agreements taken out between 6 April 2007 and 1 November 2024. Personal Contract Hire (PCH) is a straight lease with no option to buy and is not covered.

The FCA has explicitly said that participating in the scheme is likely to be simpler and more certain than taking a claim to court, and that consumers do not need a solicitor or a claims management company to use it.

What a discretionary commission arrangement is (the mechanic)

Between around April 2007 and January 2021, most car finance in the UK was arranged by the dealer, not the lender directly. The dealer acted as a broker: they had access to one or more lender panels, they ran the affordability check, and they picked the finance product they offered you.

Under a discretionary commission arrangement, the dealer had the power to adjust the interest rate you were charged, within a range the lender allowed. The higher the rate the dealer set, the bigger the commission the lender paid the dealer. That gave the dealer a direct financial incentive to push the interest rate up, without telling you. In many cases the customer had no way to know the rate was not the lender's own decision.

The FCA banned DCAs on 28 January 2021, which is why so many of the eligible agreements sit in the 2007 to 2020 window. Agreements from 28 January 2021 onwards can still qualify under the other two categories in the scheme (high commission and undisclosed ties) but not under the DCA category itself.

The three commission set-ups the scheme catches

The FCA scheme covers three related, but distinct, situations where commission on your car finance was not properly disclosed. An agreement can fall under one or more of them:

1. Discretionary commission arrangement (DCA). The dealer could raise the interest rate to earn a bigger commission and did not tell you. Covers agreements between 6 April 2007 and 27 January 2021.
2. High commission arrangement. The commission paid to the broker was at least 35% of the total cost of credit and at least 10% of the loan amount, and this level of commission was not disclosed. Covers the whole 2007 to 2024 window. This category catches many arrangements from after the DCA ban.
3. Undisclosed contractual tie. The broker was contractually tied to a single lender (they could only offer you that lender's product) and did not tell you. Covers the whole 2007 to 2024 window.

The FCA scheme confirmation statement is where these three categories are set out in one place. You do not need to know in advance which category applies to your agreement. The lender is required to check all three when they review your file.

Do you qualify?

Work through this checklist. If you can answer yes to the first two and yes to at least one of the third set, you should file a complaint:

1. Did you take out a regulated car finance agreement between 6 April 2007 and 1 November 2024? Regulated finance means hire purchase, conditional sale, or PCP for a car, van, motorbike or campervan for personal use. Business-purpose agreements are excluded (with some exceptions for sole traders and small partnerships).
2. Was the finance arranged through a dealer or a broker (not you approaching the lender directly)?
3. Yes to any of the following:
   • You do not remember being told the commission set-up, or you were told nothing at all about how the dealer was paid.
   • The agreement is from before 28 January 2021 (DCAs were legal, common, and rarely disclosed in that period).
   • The dealer only ever offered you one lender's finance option.
   • The interest rate looks high compared with a personal loan you could have got from your own bank at the time.

If you have your original finance agreement, look for the section about "commission". If it says something like "the broker may receive commission which will be disclosed on request" but you were never told the actual amount or how it was calculated, that is a red flag consistent with a DCA or a high commission arrangement.

Cases the scheme does not cover

Not every car finance complaint fits inside the scheme. The following are outside it:

• Personal Contract Hire (PCH). A straight lease with no option to buy. PCH is not regulated in the same way as PCP or HP and is not covered.
• Business-purpose agreements. Finance for a company vehicle or a business fleet. Some sole-trader agreements can still qualify. If in doubt, complain and let the lender check.
• Agreements where you have already accepted a redress offer. If the lender already paid compensation and you signed to accept it as full settlement, that agreement is closed.
• Agreements the Financial Ombudsman or a court has already decided. If you took the case through the Financial Ombudsman Service and got a final decision, that decision stands.
• Cash purchases. If you paid outright without finance, there is no commission arrangement to review.

How much you could actually get

The average payout is around £830, but individual awards vary widely. The FCA has set out the formula. The redress amount for most cases is calculated on a hybrid basis and works like this:

1. Take the total commission paid by the lender to the broker on your agreement.
2. Take a percentage of the APR you paid: 17% for agreements from 1 April 2014 onwards, or 21% for agreements before that date.
3. Average those two figures.
4. Add simple interest at the Bank of England base rate plus 1% per year, with a minimum floor of 3% per year, from the date of the overpayment to the date compensation is paid.

In plain English: the FCA is not trying to give you back all the interest you paid. It is trying to give you back a fair share of the extra you paid because of the undisclosed commission, plus interest for the years you were out of pocket. On a typical 2018 agreement for £15,000 at 9.9% APR, this often lands somewhere between £500 and £1,500 depending on the commission level and how long the finance ran.

The FCA formula statement is the definitive source. Lenders have to apply this formula to every eligible agreement they hold.

The Johnson exception: full commission plus interest for the worst cases

Around 90,000 agreements get a bigger payout than the hybrid formula. These are cases where the facts are aligned with Johnson v FirstRand Bank Ltd, the Supreme Court case decided on 1 August 2025 that ran alongside the conjoined appeals of Wrench and Hopcraft.

In Johnson, the Supreme Court found that the customer had an unfair relationship with the lender under section 140A of the Consumer Credit Act 1974. The court held that:

• There was an undisclosed contractual tie between the broker and one lender.
• The commission was very high: at least 50% of the total cost of credit AND at least 22.5% of the loan amount.

In plain English: if your agreement is aligned with Johnson, the FCA scheme pays back the full commission paid on your deal, plus interest, rather than the hybrid average. On a big-ticket deal that can be several thousand pounds. The lender is required to check whether your file matches the Johnson pattern as part of the review.

The 1-in-3 cap on payouts

The FCA has confirmed that around 1 in 3 payouts will be reduced by a fairness cap. This is not a punishment. The cap is there so that no one ends up better off than they should have been under a properly disclosed arrangement.

In practice, the cap tends to apply where the customer paid off the finance quickly, where the original APR was already reasonable, or where the total interest paid was small. It does not affect eligibility. It only affects the amount at the end of the calculation. The FCA press release on the scheme confirmed the cap in the final rules.

The timeline as it stands

Here is where the scheme sits in September 2026, and what is expected next:

• 28 January 2021 · FCA bans discretionary commission arrangements.
• 11 January 2024 · FCA opens a formal review after a surge of complaints.
• 1 August 2025 · Supreme Court decides Johnson v FirstRand Bank Ltd (with conjoined Wrench and Hopcraft appeals) under section 140A CCA 1974.
• 30 March 2026 · FCA press release confirms the redress scheme will go ahead.
• March 2026 · Policy Statement PS26/3 published with final scheme rules.
• 2 July 2026 · Upper Tribunal partially suspends the scheme after lender legal challenges. Lenders no longer required to run calculations or pay while the case is heard.
• 14 to 18 December 2026 or 16 February 2027 · Upper Tribunal hearing scheduled.
• 2027 · If the scheme is upheld and not appealed, first payments expected to begin.
• 31 August 2027 · Hard opt-in deadline for consumers whose lenders have not contacted them.

The FCA has published a running page of legal challenge documents if you want the source material. The consumer-facing summary lives on the FCA car finance complaints page.

How to claim, in five steps

Even while the scheme is paused, complaining now keeps your place in the queue and preserves the record. The whole process is free and takes most people under 30 minutes per lender.

1. Find your finance agreement number. Look on the original credit agreement, an old statement, or a settlement quote. If you cannot find it, the lender can look up your account from name, date of birth, and address at the time of the agreement.
2. Identify the lender. This is the finance company on the credit agreement, not the dealer. Common ones include Black Horse, Santander Consumer, MotoNovo, Close Brothers, Advantage Finance, and the finance arms of the big manufacturers (VWFS, BMW Financial Services, Mercedes-Benz Financial Services, Ford Credit, and so on).
3. Send a written complaint to the lender. An email or letter is fine. Say clearly: "I am complaining about the way my car finance agreement was arranged. Please review the agreement for a discretionary commission arrangement, a high commission arrangement, or an undisclosed contractual tie between the dealer and the lender, under the FCA motor finance consumer redress scheme." Include your name, address at the time of the agreement, current address, agreement number, and the dealer name.
4. Wait for the acknowledgment. Under FCA rules, the lender must acknowledge the complaint. During the current pause, they are not required to send a substantive response. They will confirm the complaint has been logged for review once the scheme restarts.
5. Escalate to the Financial Ombudsman only if the lender rejects the complaint outright (not just delays it while the scheme is paused). Complaints to the Financial Ombudsman are also free. Send them within 6 months of the lender's final response.

If you would rather adapt a template than write from scratch, the motor finance commission complaint letter on the Useful Documents page can be downloaded, filled in, and posted to the lender the same day. It cites the Consumer Credit Act 1974 s.140A, the Johnson v FirstRand judgment, and the FCA DISP rules, and it works whether the FCA scheme covers the agreement or the complaint has to be dealt with on its own merits. Free, branded, and no claims management company involved.

Why never to use a claims management company

Motor finance claims are the current fastest-growing category for claims management companies (CMCs) in the UK. Adverts on radio and social media promise "you could be owed thousands". They are hoping you sign up before you realise you can do it yourself for free.

CMCs handling motor finance claims are FCA-regulated and can charge up to 36% including VAT of the compensation you receive. On the average £830 payout, that could take almost £300. On a Johnson-aligned payout of £3,000, it takes over £1,000. They also have to legally tell you that the scheme is free before you sign, which is often buried in the small print.

The FCA position on this is unambiguous. The scheme is free, direct, and does not need a middleman. If a friend or a broker keeps pushing you to sign up with a CMC, that is a signal about their incentive, not about your situation.

What happens if the scheme is overturned

If the Upper Tribunal rules against the scheme, or if a further appeal succeeds, the FCA-mandated redress route disappears. That does not mean every route disappears.

The unfair relationship test under section 140A of the Consumer Credit Act 1974 is still in force. Individual complaints to the Financial Ombudsman about discretionary commission arrangements are still allowed. The Supreme Court decision in Johnson v FirstRand Bank Ltd (1 August 2025) also still stands as legal precedent. A collapse of the FCA scheme would probably send tens of thousands of complaints straight to the Ombudsman, one by one, and eventually to court.

What that means for you: the complaint you filed now is not wasted work even if the scheme is torn up. It is on record with the lender, it is time-limit protected, and it lets you escalate to the Financial Ombudsman or, ultimately, to court on the unfair relationship test.

FAQs · The FCA £830 redress scheme