In short: the Financial Conduct Authority has confirmed a UK-wide compensation scheme for motor finance customers who weren't told about commission arrangements between their lender and broker between 2007 and 2024. Firms are expected to pay out around £7.5 billion in redress (roughly £9.1 billion in total costs to firms once admin is included), across an estimated 12.1 million agreements, with an average payout of around £829. It covers car finance taken out on Hire Purchase (HP) or Personal Contract Purchase (PCP) — here's what actually counts, and what to do if you think you're owed.
What the scheme actually covers
The FCA's redress scheme (confirmed in Policy Statement PS26/3) addresses three specific problems in how motor finance was sold between 6 April 2007 and 1 November 2024:
- Discretionary Commission Arrangements (DCAs): deals that let the dealer or broker adjust your interest rate upward in exchange for a bigger commission — banned by the FCA from January 2021, but not retrospectively addressed until this scheme.
- Undisclosed high commission: commission worth at least 39% of the total credit cost, or 10% of the loan amount, that wasn't clearly disclosed to you.
- Undisclosed contractual ties: exclusivity or right-of-first-refusal arrangements between your lender and the dealer that weren't made clear.
Who's excluded
Not every agreement from that period qualifies. The FCA has excluded cases where the commission was minimal (£120 or less for agreements before April 2014, £150 or less after), where no interest was charged, where the loan was unusually large (the top 0.5% by value for that year), or where you've already received compensation via the Financial Ombudsman or a court.
Does it cover PCP as well as HP?
Yes — the scheme applies to Hire Purchase (HP), Personal Contract Purchase (PCP) and conditional sale agreements alike, as long as the lender paid the dealer or broker a commission that fell into one of the three categories above. The vehicle type doesn't change eligibility; what matters is whether a regulated credit agreement was used and whether an undisclosed or discretionary commission was involved.
One important limit: agreements taken out by a limited company are generally outside consumer credit protections entirely. If you financed a car as a sole trader on a personal HP/PCP agreement, you're typically still covered in the same way as a private buyer — but a car financed under a limited company's name is not.
Not sure who you financed with?
If you're trying to identify who to contact, our lenders hub lists contact routes for major UK car finance providers.
Key dates to know
- 30 June 2026: implementation deadline for agreements from 1 April 2014 onward.
- 31 August 2026: implementation deadline for earlier agreements (2007-2014).
- Firms must contact eligible customers within 3 months of their implementation date, and customers then have roughly 6 months to respond.
- 31 August 2027: final deadline to complain if you believe you're eligible but haven't been contacted.
What to do now
You generally don't need to make a claim yourself — firms are required to proactively identify and contact eligible customers. If you believe you had a motor finance agreement (HP or PCP) in this window and haven't heard anything by the relevant deadline above, contact your lender directly and ask whether your agreement has been assessed under the scheme, or raise it with the Financial Ombudsman Service.