What the New FCA Motor Finance Redress Scheme Means for Your PCP Claim

If you took out a PCP or hire purchase agreement between 6 April 2007 and 1 November 2024, you may be owed compensation under the FCA’s motor finance redress scheme. The Financial Conduct Authority confirmed the industry-wide scheme in March 2026 after years of concern about commission arrangements between lenders, dealers and brokers.

The FCA estimates that around 12.1 million agreements are eligible, with an average payout of around £830 per agreement. Total consumer redress is expected to be around £7.5 billion. The scheme has been legally challenged, and payouts are now likely to be delayed, but the regulator is still telling consumers with concerns to complain now. If you have a mis sold PCP finance agreement in scope, getting your complaint logged early can put you in a stronger position once the scheme starts moving.

What the Scheme Actually Covers

The scheme covers motor finance agreements where commission was payable by the lender to the broker or dealer and important information about that arrangement was not properly disclosed to the customer.

This includes PCP and hire purchase agreements for cars, vans, motorbikes and campervans. Personal Contract Hire is not covered. The agreement must generally have been entered into between 6 April 2007 and 1 November 2024.

The FCA has identified 3 main types of arrangement that may lead to compensation. The first is a discretionary commission arrangement, where the broker or dealer could influence the interest rate to earn more commission. These arrangements were banned by the FCA in January 2021. The second is a high commission arrangement, where the commission was at least 39% of the total cost of credit and at least 10% of the loan. The third is a contractual tie, where the broker used only one lender or gave one lender the right of first refusal, unless there were visible links between the lender, manufacturer and franchised dealer.

Some agreements are excluded. These include agreements already settled, cases already decided by the Financial Ombudsman or a court, agreements where no interest was charged, very low commission cases, certain older agreements above £25,000 before 6 April 2008, and high-value loans above the FCA’s annual 99.5th percentile threshold.

How Compensation Is Calculated

The FCA’s calculation is designed to reflect the unfairness caused by non-disclosure without putting consumers in a better position than if they had been treated fairly.

In the most serious cases, people may get back the commission paid, plus interest. For most people, compensation will be the average of 2 figures: the commission paid and the estimated loss. The estimated loss is based on a percentage discount of the interest rate paid, with 21% used for agreements before 1 April 2014 and 17% used for agreements from 1 April 2014 onwards.

Interest is then added at the annual average Bank of England base rate plus 1%, with a minimum of 3% in any year. In around 1 in 3 cases, the final amount may be capped so that compensation does not exceed the FCA’s limits.

The FCA’s average figure of around £830 per agreement is only an estimate. Some claims will be worth more and some will be worth less. The guides on what compensation in a car finance case can look like and the difference between a flat rate and an APR explain how these figures can build up in practice.

The Legal Challenge and What It Means for You

The FCA’s scheme has been challenged by several parties, including lenders and a consumer group. The FCA has said it will defend the scheme as lawful and as the quickest and most cost-effective way to compensate consumers.

The legal challenge has affected timing. The FCA has removed earlier scheme dates from its consumer guidance and says the challenge will delay payouts that had been expected to begin in 2026. It has also told firms to continue preparing by identifying relevant complaints and agreements, gathering data on commission arrangements and disclosure, and cooperating with the Financial Ombudsman Service.

This does not mean you should wait. The FCA’s current advice is still that if you have concerns, the best step is to complain directly to your lender. If you complain before the scheme starts, your case should be assessed sooner once the process is operating.

The full background on how the complaint process splits between dealer, lender, and broker and the evidence that helps a car finance claim is worth reading before you start.

What to Do Right Now

You have 3 main options.

First, you can complain directly to your lender for free. Set out your agreement details and explain that you are concerned commission was paid and not properly disclosed.

Second, you can go to the Financial Ombudsman if you receive a final response and remain unhappy, or if the lender fails to deal with your complaint properly. The timing of responses is currently affected by the legal challenge, so keep copies of everything you send and receive.

Third, you can use a regulated no win no fee car finance claims service to handle the paperwork and follow-up. This may be helpful if you have several agreements, cannot locate old documents, or simply want someone to manage the process for you.

If you are unsure what you signed at the time, the explainer on what you were and were not told about your car finance deal and the notes on joint car finance agreements may help. If the agreement has already been paid off, the article on whether you can still claim on a settled deal explains why you may still be able to complain.

Frequently Asked Questions

Does the legal challenge mean I should wait before complaining?

No. The FCA says consumers with concerns should complain to their lender. Complaining before the scheme starts should mean your case is assessed sooner once firms are able to issue scheme decisions.

How long do I have?

Consumers who are not contacted by their lender can make a complaint until 31 August 2027. However, waiting may mean you are dealt with later.

Can I claim if I financed a car through a dealer?

Yes. Many PCP and hire purchase agreements were arranged through dealers acting as brokers. The commission arrangement usually sat between the lender and the dealer or broker.

Will claiming affect my credit file?

No. Making a complaint should not affect your credit score. The guide on what a complaint does to your credit file explains this in more detail.

What if I had more than one finance agreement?

Each agreement is assessed separately. If you had several qualifying PCP or hire purchase agreements, you may be able to complain about each one.

Check Whether You Are Owed

If you had a PCP or hire purchase agreement between 2007 and 2024, it is worth checking whether you may be owed compensation. You can start your claim online or speak to the team if you would rather ask questions first.

It is also worth looking over the people behind Claim First, the frequently asked questions, and what previous clients have said. Everything is handled on a car finance PCP claim no win, no fee basis, so there is nothing to pay upfront and nothing to pay if the claim does not succeed.