Summary
What this article covers in 30 seconds
- The proposed scheme covers customers treated unfairly from 6 April 2007 to 1 November 2024.
- The FCA estimates 14.2 million motor finance agreements may be eligible for the scheme.
- Expected take-up is about 85%, with estimated redress liability of £8.2 billion including interest.
- The consultation closes on 18 November 2025, with final rules and launch aimed for early 2026.
The FCA released its update on the motor finance redress scheme, marking one of the most significant shifts in the motor finance landscape in years.
The FCA wants to set up an industry-wide compensation redress scheme to reimburse motor finance customers who were treated unfairly from 6 April 2007 to 1 November 2024. The scheme focuses on cases where lenders paid commission to brokers, or had contractual ties, but failed to disclose them adequately to consumers.
The redress scheme is expected to cover agreements with discretionary commission arrangements, high commission levels or exclusive contractual ties.
Estimated eligibility and redress
- The proposals estimate that 14.2 million motor finance agreements may be eligible for the scheme.
- The FCA expects about 85% take-up, giving an estimated redress liability of £8.2 billion including interest. If all eligible consumers participated, redress could reach up to £9.7 billion.
- The average compensation per agreement is estimated at around £700.
Key dates
The FCA is consulting on extending the deadline for firms to issue final responses to motor finance complaints to 31 July 2026.
The consultation closes on 18 November 2025, and the FCA aims to publish final rules and launch the scheme in early 2026.
Implications for motor finance firms
With questions already mounting around liability, remediation and customer impact, firms need to cut through the noise and understand what the proposed scheme means for their own business.
Join our webinar to understand the rules, risks and road ahead.
Frequently asked questions
It is intended for motor finance customers treated unfairly from 6 April 2007 to 1 November 2024 where commission or contractual ties were not adequately disclosed.
The FCA estimates that 14.2 million motor finance agreements may be eligible for the proposed scheme.
The FCA expects about 85% take-up and estimates redress liability of £8.2 billion including interest, rising to £9.7 billion if all eligible consumers participate.
The consultation closes on 18 November 2025, and the FCA aims to publish final rules and launch the scheme in early 2026.