The Financial Conduct Authority has published the final rules for its motor finance Consumer Redress Scheme (PS26/3), setting out exactly how affected consumers will be identified, how compensation will be calculated, and when payments will start flowing.
The scheme is confirmed and mandatory
Lenders must participate. This is not a voluntary arrangement. The FCA has imposed a mandatory, industry-wide scheme requiring lenders to proactively identify affected customers and pay compensation where it is owed.
Who is eligible?
The scheme covers regulated motor finance agreements entered into between 6 April 2007 and 1 November 2024, where commission was paid to a dealer and was not properly disclosed. Around 12.1 million agreements are now estimated to fall within scope.
- DCAs, where the dealer could adjust your interest rate to earn higher commission and this was not disclosed
- High commission cases, where the commission paid amounted to at least 39% of the total cost of credit and 10% of the loan
- Contractual tie arrangements, where the lender had an exclusivity deal with the dealer
How much is the average payout, and why did it go up?
The confirmed average payout is £829 per agreement, up from approximately £700 at the consultation stage. The increase is primarily due to a change in how compensatory interest is calculated — the final rules set interest at the Bank of England base rate plus 1%, with a minimum floor of 3% in any year.
Around 90,000 consumers will receive the full commission repayment plus interest. Around 1 in 3 cases will be capped.
Two implementation deadlines
- Scheme 2 (agreements from April 2014 to November 2024): implementation deadline 30 June 2026
- Scheme 1 (agreements from April 2007 to March 2014): implementation deadline 31 August 2026
What this means if you haven't checked yet
The FCA's scheme is free to use and does not require legal representation. For most consumers with standard DCA cases, it is likely to be the right route, and lenders will be required to contact eligible consumers proactively.
If you would like an independent assessment of whether your specific agreement may be better served by separate legal representation, for example where a commission was unusually high, we are able to provide that. There is no obligation to proceed, and we will always tell you honestly whether the free scheme is likely to deliver a fair result in your case.