Why some car finance agreements may not qualify under the FCA redress scheme

Not every car finance agreement falls within the FCA’s motor finance redress scheme. The final rules cover qualifying agreements taken out between 6 April 2007 and 1 November 2024 where the lender paid commission to the broker. Compensation depends on an undisclosed discretionary commission arrangement, high commission arrangement or qualifying contractual tie.

The FCA estimates that 12.1 million agreements are eligible. At 75% participation, firms are expected to pay around £7.5 billion, with average redress estimated at £829 per agreement. If an agreement falls outside the scheme, a mis-sold car finance claim may still need another route.

What the scheme covers

The FCA confirmed the final rules in March 2026 and created two schemes: one covering 6 April 2007 to 31 March 2014 and another covering 1 April 2014 to 1 November 2024. Commission alone is not enough. At least one relevant undisclosed feature must be present, subject to exclusions and exceptions. This is why what compensation looks like in car finance mis-selling cases can differ.

An agreement may not receive compensation where:

• Commission was £120 or less before 1 April 2014, or £150 or less from that date.

• No interest was charged.

• A discretionary commission arrangement existed but was not used to earn discretionary commission.

• The agreement was Personal Contract Hire.

• The agreement was for business purposes, or before 6 April 2008 exceeded £25,000.

• The complaint has already been determined by a court, considered by the Financial Ombudsman Service, or compensation has already been accepted.

• The loan was higher than 99.5% of other loans in that year.

About 64,000 otherwise eligible agreements are also expected to receive no compensation because their APR was within the lowest 5% of the market, excluding 0% deals. Understanding flat rate and APR in car finance can help when reviewing finance paperwork.

A lender may rely on limited exceptions, including where no better deal was available. Questions around joint car finance agreements can need extra consideration, while car finance complaints for business use vehicles fall outside the FCA scheme.

A simple example

For a 2019 agreement with £340 commission and £2,100 total cost of credit, commission is about 16% of the cost of credit. That is below the high-commission test of at least 39% of total cost of credit and at least 10% of the loan. It could still potentially qualify if an undisclosed DCA was used to earn discretionary commission.

Where things stand now

Four parties have challenged the scheme. In July 2026, the Upper Tribunal suspended parts of it. Firms must continue identifying agreements and gathering information, but they do not currently have to calculate or pay redress until the Tribunal process concludes. Hearings are listed for either 14–18 December 2026 or 16–26 February 2027.

Consumers can still complain. For agreements beginning before 1 April 2014, complaints made by 31 August 2026 fall within the earlier-treatment implementation period. That deadline was 30 June 2026 for later agreements. Consumers who are not contacted can still complain by 31 August 2027, so time limits for car finance complaints remain important.

Frequently asked questions

How do I know if I had a discretionary commission arrangement?

You may not be able to tell from your paperwork. Your lender will need to check the relevant records.

Can I complain if the agreement has already been paid off?

Yes. A completed agreement is not excluded simply because it has been paid off, provided it otherwise meets the rules and has not already been finally resolved or compensated.

Does it cost anything to complain?

You can complain to your lender for free. Where a decision can be referred to the Financial Ombudsman Service, the Ombudsman is also free for consumers.

What if my finance was not for a car?

Other credit products have separate complaint routes, including payday loan refunds for relevant high-cost short-term credit complaints.

What if my agreement is ruled out?

Being outside the scheme does not necessarily end every possible route. Depending on the circumstances, another complaint or court claim may still be possible. The difference between misrepresentation and an unfair relationship can matter, and the evidence that helps a mis-sold car finance claim should be kept safely.

Check where you stand

If you are unsure whether an agreement falls within the scheme, check the dates, lender and finance type. Claim First also supports housing disrepair claims and scam recovery alongside finance-related claims.