Car Finance Redress in the UK: What It Means for Drivers in 2026

If you bought a car, van, motorbike or campervan on PCP or hire purchase between 6 April 2007 and 1 November 2024, you may be due compensation under the FCA's car finance redress scheme. Around 12.1 million agreements may be eligible, with an average estimated payout of about £830. But the scheme is being challenged in the courts and parts of it are suspended, so payments are not expected before 2027.

Key takeaways

  • PCP and hire purchase agreements on cars, vans, motorbikes and campervans from 6 April 2007 to 1 November 2024 may be covered.
  • The FCA estimates around 12.1 million eligible agreements and an average payout of about £830.
  • Parts of the scheme were suspended on 2 July 2026 while legal challenges are heard, in February 2027.
  • If the scheme is upheld and not appealed, the FCA expects payments to begin in 2027.
  • You can complain to your lender yourself for free; you do not need a claims company.
In this guide

Where things stand (October 2026)

The FCA confirmed the redress scheme in March 2026. Three lenders (Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance) and Consumer Voice, represented by Courmacs Legal, then challenged it at the Upper Tribunal, and on 2 July 2026 parts of the scheme were suspended on terms agreed with the challengers. The hearing is set for 16 to 26 February 2027, with a judgment expected in the months after.

While the legal process continues, lenders do not have to calculate or pay compensation under the scheme. If the scheme is upheld and the judgment is not appealed, the FCA expects payments to begin in 2027. If the scheme, or parts of it, are quashed, there may be no compensation scheme, and lenders would deal with complaints through the normal complaints process.

What is car finance redress?

Car finance redress is an industry-wide compensation process for drivers who may have been treated unfairly when taking out motor finance.

In plain English, some buyers may have paid more interest than they should have because the dealer or broker received commission that influenced the rate they were offered. The scheme is designed so that eligible drivers can be compensated without having to fight the case themselves.

Why does the scheme exist?

The scheme follows years of concern about hidden commission in motor finance. It covers arrangements that customers were not told about, such as:

  • discretionary commission arrangements, where the broker could set the interest rate and earn more commission by charging more
  • high commission, at least 39% of the total cost of credit and 10% of the loan
  • contractual ties between lenders and dealers

The goal is simple: if a driver was charged more than they should have been because of how commission was handled, the lender should put it right.

Who may be eligible?

Broadly, you may be eligible if:

  • you bought a car, van, motorbike or campervan
  • the agreement was hire purchase, which includes PCP
  • it started between 6 April 2007 and 1 November 2024
  • the lender paid commission to the dealer or broker that was not properly disclosed to you

You may still be eligible even if you have repaid the agreement, sold the car or had it repossessed. The FCA estimates that around 37% of agreements in the period, about 12.1 million, are eligible.

Who is unlikely to qualify?

  • Personal contract hire and other pure leasing deals are not covered.
  • Agreements where no interest was charged are excluded.
  • Agreements where the commission was £120 or less (before 1 April 2014) or £150 or less (from that date) are treated as fair.
  • High-value loans (above 99.5% of loans that year) and some agreements for business purposes are excluded.
  • Complaints already decided by the Financial Ombudsman Service or a court, or where you have already accepted compensation, are excluded.
  • Agreements outside the 6 April 2007 to 1 November 2024 window are not covered.

What about deceased customers?

Beneficiaries may be able to claim on behalf of someone who has died, provided the agreement falls within the scheme. The lender may ask for a copy of the will or the grant of probate.

How much could you get back?

The FCA estimates an average payout of around £830 per eligible agreement. The actual amount will vary because it depends on:

  • the commission paid by the lender
  • how much extra interest was charged as a result
  • the length and value of the agreement

Compensation includes interest, and about 1 in 3 payouts are capped under the scheme's limits. Some drivers will receive less than £830, others more. There is no fixed payout per person.

What should drivers do now?

The safest first step is usually to complain directly to the lender that provided the finance. You do not need a claims management company or law firm to check eligibility or to complain.

The scheme's deadlines for complaints to be handled on the original timetable have passed: 30 June 2026 for agreements from 1 April 2014, and 31 August 2026 for older agreements. If you complained by then, your lender should tell you by 18 November 2026 or 18 January 2027 respectively if you are not owed compensation, though some people may not hear until the legal process ends. Not receiving a letter does not necessarily mean you are owed compensation.

If you have not complained yet, you can still complain to your lender for free. Under the scheme rules, people who have not been contacted by their lender can complain until 31 August 2027.

What if your paperwork is missing?

If you cannot find the original finance documents, you can usually still identify the lender by checking:

  • old credit reports from the main UK credit reference agencies
  • bank statements covering the years you were paying the finance
  • any letters or emails from the lender about the agreement

Once you know who provided the finance, contact them and ask them to confirm the agreement details on their records.

Should you use a claims company?

You do not need one. The FCA says claims management companies and law firms may take up to 36% of any compensation in fees, including VAT, and the process is designed so drivers can complain themselves for free.

Some people may still prefer paid help if their records are unusually complex. If you do, check the fees, do not sign up with more than one firm, and be aware that cancelling an agreement may involve a fee, which should be reasonable.

Watch out for scams

Where there is money on the table, there are scammers. The FCA warns that scammers are posing as car finance lenders and offering fake compensation.

  • Be wary of unexpected calls, texts or emails about car finance compensation.
  • Do not share personal or financial details in response to messages you did not ask for.
  • If in doubt, contact your lender using details from its official website.
  • The FCA will never ask you to transfer money to it, or for your bank PINs or passwords.

Short takeaway

If you had a PCP or hire purchase agreement on a car, van, motorbike or campervan between 6 April 2007 and 1 November 2024, it may be worth checking whether you are due a payout. You can complain to the lender yourself for free. Payments depend on the outcome of the legal challenge heard in February 2027, and are expected to begin in 2027 if the scheme is upheld.

Further help

The FCA's car finance claims page has the latest position, including what to expect from your lender. MoneySavingExpert offers a free, step-by-step car finance reclaim tool to help you complain to your lender; it is an external resource and not a Car Cost Guide service.

While you wait, see what your current car is actually costing you with the Cost Per Mile Calculator.

FAQs

Who is eligible for the UK car finance redress scheme?
You may be eligible if you took out a PCP or hire purchase agreement on a car, van, motorbike or campervan between 6 April 2007 and 1 November 2024, and the lender paid the dealer or broker commission that was not properly disclosed. Personal contract hire (leasing) is not included, and some agreements are excluded under the scheme rules.
How much could I get back?
The FCA estimates an average of around £830 per eligible agreement. Your actual amount depends on the commission paid, the extra interest you were charged and the size and length of the agreement, and about 1 in 3 payouts are capped.
Can I claim if I have already paid off the car finance?
Yes. You may still be eligible if you have repaid the agreement, sold the car or had it repossessed, as long as the original agreement falls within the scheme.
Do I need a claims management company?
No. You can complain to your lender yourself for free. The FCA says claims management companies and law firms may take up to 36% of any compensation in fees, including VAT.
When will payments be made?
Not yet. Parts of the scheme were suspended on 2 July 2026 while legal challenges are heard by the Upper Tribunal from 16 to 26 February 2027. If the scheme is upheld and the judgment is not appealed, the FCA expects payments to begin in 2027.
What if I do not have my finance paperwork?
You can usually identify the lender from old credit reports, bank statements from the years you were paying, or old letters or emails. Once you know the lender, contact them and ask them to confirm the agreement details on their records.

This article reflects the FCA's published position on 22 October 2026. The scheme is subject to a legal challenge and may change; check the FCA's car finance claims page for the latest position. This is general information, not financial or legal advice.

Sources and review

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