A timeline of car finance mis-selling

The Financial Conduct Authority’s (FCA) proposed car finance redress scheme, which is likely to see compensation payouts begin in mid-2026, is the culmination of years of work in the motor finance space.

While the car finance market has been under intense scrutiny since January 2024, when the FCA began its review into historical mis-selling using discretionary commission arrangements (DCAs), the journey that has brought the market to its current point, where it is facing an estimated £8.2 billion collective redress bill, can be traced as far back as 2006.

This timeline explores all the notable developments since then that have brought us to the cusp of the final publication of the regulator’s redress scheme rules.

30 March 2006

On 30 March 2006, the Consumer Credit Act 2006 achieved royal assent.

This legislation extended the scope of the Consumer Credit Act 1974 and, amongst other things, introduced the unfair relationship provisions that would allow consumers to challenge lenders in court if the circumstances of their lending agreements were such as to make them unfair, and also gave consumers access to the Financial Ombudsman Service (FOS), which itself was established in April 2000 and given statutory powers from 18 June 2021 by the Financial Services and Markets Act 2000.

6 April 2007

On 6 April 2007, the unfair relationship provisions came into force, and the FOS took over jurisdiction of the consumer credit industry, including the motor finance market.

Before 6 April 2007, consumers’ only means of complaint about a car finance agreement (on the assumption that it would not fall within the definition of ‘extortionate credit bargain’ in the original provisions of the Act) was to complain directly to the lender, in line with whatever procedure was outlined in their credit agreement, with few options should the lender dismiss their complaint.

31 March 2010

On 31 March 2010, the now-defunct Office of Fair Trading (OFT) published its final guidance on irresponsible lending, clarifying the standards expected of creditors under the Consumer Credit Act and covering each stage of the lending process from pre-contractual matters like advertising and marketing to assessing affordability and the consideration of issues such as the handling of consumer arrears and default.

1 April 2014

On 1 April 2014, the FCA assumed responsibility for consumer credit regulation, including the motor finance sector, from the OFT, which was closed on 31 March 2014.

18 April 2017

On 18 April 2017, the FCA published its 2017/18 Business Plan, setting out, for the first time, a plan to conduct a review of the motor finance market.

31 July 2017

On 31 July 2017, the regulator provided an update on its work in this space, saying it was conducting its review of the motor finance market ‘to ensure that it works well and to assess whether consumers are at risk of harm.’

At this time, the regulator noted that it had been working since the publication of its 2017/18 Business Plan to identify potential areas of consumer harm in the market, and highlighted personal contract purchase (PCP) agreements as potentially being problematic for the first time.

The FCA also noted the Prudential Regulation Authority’s (PRA) 4 July 2017 Statement on consumer credit and its analysis of PCP agreements and the risk exposure they create to a vehicle’s Guaranteed Minimum Future Value (GMFV) for lenders, saying that it ‘considered direct consumer risk exposure to be more limited,’ but potentially ‘heightened where there has been an inadequate assessment of affordability and/or a lack of clarity for the consumer in their understanding of the contract.’

We have previously examined GMFVs and their role in keeping monthly repayments low as a potential flaw in PCP agreements that introduces a risk that consumers may not be aware of.

14 March 2018

On 14 March 2018, the FCA published an update on its work in the motor finance sector, noting it had carried out activities including a detailed analysis of millions of consumers' credit files and a mystery shopping exercise.

This update included further insights, including that it had already found that:

• if not properly managed, some of the commission arrangements in use in the sector could incentivise dealers to arrange more expensive finance for customers;
• some customers were not being given key information in an accessible manner, including information provided on lenders’ and dealers’ websites; and
• the largest lenders were adequately managing risks around prices in the used car market (which is where GMFV comes in), but should regularly consider changes in the market.

The regulator also outlined that the remainder of its review would focus on:

• whether lenders were properly assessing affordability, particularly for consumers with lower credit scores;
• how lenders were managing the risks around commission arrangements with dealers and potential conflicts of interest; and
• whether consumers were able to make informed decisions with the information they were given.

4 March 2019

On 4 March 2019, the FCA published Our work on motor finance – final findings, alongside a statement and a press release in which the regulator said it was acting to address unclear and excessive motor finance costs.

The FCA cited ‘serious concerns’ about the use of discretionary commission models and formally stated for the first time that their use may have led to consumers paying significantly more for their motor finance than they should have done, adding that these commission models could be costing up to £300 million per year.

The regulator also stated that it was not satisfied that firms were complying with regulatory requirements, including those relating to affordability checks. These are crucial analyses that directly contradict the defence of some lenders who believe the FCA's proposed redress scheme represents a moving of the goalposts.

We examine this argument and others in greater detail in our analysis of why lenders’ defences against car finance mis-selling do not stand up to scrutiny.

15 October 2019

On 15 October 2019, the regulator published Consultation Paper CP19/28, Motor finance discretionary commission models and consumer credit commission disclosure, seeking feedback on proposals to address consumer harms in the motor finance market by banning DCAs, as well as changes to its commission disclosure rules. This consultation remained open until 20 January 2020.

28 July 2020

On 28 July 2020, the FCA published Policy Statement PS20/8, Motor finance discretionary commission models and consumer credit commission disclosure – feedback on CP19/28 and final rules. In this statement, the regulator confirmed that it was banning the use of DCAs, effective from 28 January 2021, citing consultation feedback and operational pressures due to the COVID-19 pandemic in its reasons for giving firms additional time to implement the new rules. In practice, DCA use had already fallen and been replaced by non-discretionary commission models by this time.

In a press release confirming this action, the FCA estimated the move would save consumers £165 million a year on their motor finance and also noted that the changes affected all credit brokers and were not exclusively targeted at the car finance sector. The regulator also confirmed that it was updating its rules on commission disclosure as proposed in CP 19/28.

21 January 2021

On 21 January 2021, the DCA ban and its updated rules around commission disclosure came into force, and the FCA updated section CONC 4.5 Commissions of its handbook to reflect these changes.

11 January 2024

On 11 January 2024, the regulator confirmed it would undertake work in the motor finance market, specifically reviewing the use of DCAs and the conduct of brokers and lenders before the 2021 DCA ban. The FCA also paused DCA complaint handling requirements until 25 September 2024 and outlined its reasons for making this decision without consultation in Policy Statement PS24/1, Temporary changes to handling rules for motor finance complaints, and also disclosed that, as of December 2023, there had been approximately 10,000 motor finance complaints referred to the FOS.

This action followed a significant volume of car finance mis-selling complaints being received by the FOS after the Ombudsman published DRN-4188284 and DRN-4326581, two decisions in favour of consumers relating to commission disclosure and unfair relationships against Black Horse and Clydesdale Financial Services, trading as Barclays Partner Finance, respectively.

8 April 2024

On 8 April 2024, it was reported that Clydesdale Financial Services was launching a judicial review to challenge the Ombudsman’s decision in DRN-4326581.

9 May 2024

On 9 May 2024, the FOS disclosed that it had approximately 20,000 open complaints related to car finance commission and said that, due to the FCA's work and pending court decisions, it was unlikely to be able to issue final decisions on such complaints 'for some time.'

The Ombudsman said it would continue to accept and investigate complaints as far as possible so that it could issue final decisions as soon as it was appropriate.

30 July 2024

On 30 July 2024, the regulator provided an update on its work and published Policy Statement PS24/11, Extending the temporary changes to handling rules for motor finance complaints, in which it proposed to extend the pause on complaint handling until 4 December 2025.

The FCA stated it would set out the next steps in its review of the historical use of DCAs in May 2025, when it expected to have completed its work and would also know the outcome of the Clydesdale judicial review and the Court of Appeal's decision in the Johnson, Wrench and Hopcraft test cases.

24 September 2024

On 24 September 2024, the regulator confirmed the extension of the pause in complaint handling requirements until 4 December 2025.

25 October 2024

On 25 October 2024, the Court of Appeal published its judgment in the Johnson, Wrench and Hopcraft test cases, siding with the claimants in all three cases and finding it unlawful for a car finance broker to receive commission from lenders without the borrowers' knowledge. The Court of Appeal ruling sent shockwaves through the motor finance industry, opening up the possibility that any undisclosed commissions—rather than solely those related to DCAs—within car finance agreements may constitute mis-selling and, as a result, lead to compensation being due on a significantly greater number of agreements.

Both lenders involved in the test cases, FirstRand Bank trading as MotoNovo Finance, and Close Brothers, immediately signalled their intention to appeal to the Supreme Court.

13 November 2024

On 13 November 2024, less than three weeks after the Court of Appeal ruling, the regulator announced a consultation on extending its pause on complaint handling requirements to agreements involving non-discretionary commissions, acknowledging that the Court of Appeal judgment was likely to lead to lenders receiving a significant volume of complaints.

10 December 2024

On 10 December 2024, the Supreme Court granted FirstRand Bank and Close Brothers permission to appeal the Court of Appeal rulings. The FCA was later permitted to intervene in the case.

17 December 2024

On 17 December 2024, the High Court found in favour of the FOS in a review of DRN-4326581, dismissing all three grounds of appeal brought by Clydesdale Financial Services.

In a statement on the same date, the regulator said it welcomed the additional clarity the judgment brought to DCA complaints.

19 December 2024

On 19 December 2024, the FCA published Policy Statement PS24/18, Further temporary changes to handling rules for motor finance complaints, confirming the pause on complaint handling now also applied to non-DCA complaints and aligning with the existing deadline for DCA complaints of 4 December 2024.

24 December 2024

On 24 December 2024, Clydesdale Financial Services was granted permission to appeal to the Court of Appeal.

This appeal began and was paused in the summer of 2025 pending the Supreme Court’s decision in Johnson, Wrench and Hopcraft. Clydesdale Financial Services would later withdraw its appeal following the Supreme Court’s judgment.

11 March 2025

On 11 March 2025, the regulator said it was likely to consult on a motor finance redress scheme.

In the same update, the FCA said it would no longer set out next steps in May as originally intended, but would instead confirm within six weeks of the Supreme Court's judgment whether it would consult on an industry-wide redress scheme and, if so, how it would approach this.

1 – 3 April 2025

Between 1 and 3 April 2025, the Supreme Court heard appeals from FirstRand Bank and MotoNovo Finance in Johnson, Wrench and Hopcraft.

5 June 2025

On 5 June 2025, the regulator issued a statement setting out the key considerations it would need to take into account in any potential motor finance redress scheme.

This statement included an overview of the principles and potential scope of a redress scheme, including considerations of whether it would be opt-in or opt-out and how firms should calculate redress.

These issues were among several that Consumer Voice later highlighted in research published after the conclusion of the FCA’s redress consultation.

1 August 2025

On 1 August 2025, the Supreme Court handed down its judgment in the Johnson, Wrench and Hopcraft test cases.

Although the Supreme Court ruling was, in some quarters, lauded as a ‘win’ for lenders, it was clear that the motor finance industry would still face significant compensation liabilities.

Read our summary of the Supreme Court ruling here.

3 August 2025

On 3 August 2025, less than 48 hours after the Supreme Court delivered its judgment, the regulator confirmed that it would consult on a motor finance redress scheme, outlining its reasons for doing so and some of the elements its consultation would include.

7 October 2025

On 7 October 2025, the FCA published its redress proposals in Consultation Paper CP25/27, Motor Finance Consumer Redress Scheme.

In a statement announcing the consultation, the regulator said that it estimated that 14.2 million car finance agreements entered into between 6 April 2007 and 1 November 2024 would be eligible for compensation, outlining that redress would be due on agreements involving inadequate disclosure of one or more of the following:

• a DCA;
• excessive commission, which the FCA defined as commission that is 35% or more of the total cost of credit and 10% or more of the total cost of the loan; or
• a contractual tie, where a lender had exclusivity or the right of first refusal to provide motor finance.

The regulator set a deadline of 18 November 2025 for receiving consultation responses.

CP25/27 also included a proposal to extend the pause on complaint handling requirements until 31 July 2026. Responses to this specific proposal were due by 4 November 2025.

5 November 2025

On 5 November 2025, the FCA extended the consultation response deadline to 5 pm on 12 December 2025, citing feedback it had already received around the time required to analyse market-wide data and its desire to ensure everything was in place, so that its redress scheme would run smoothly. The regulator also confirmed that it would publish its final redress rules by the end of March 2026.

3 December 2025

On 3 December 2025, the FCA published Policy Statement PS25/18, Changes to handling rules for motor finance complaints, and announced a final extension to its pause on complaint handling requirements until 31 May 2026, after which complaint handling will resume as usual, with lenders required to provide a final response to complaints within eight weeks.

In a statement accompanying PS25/18, the regulator noted that this timeframe would give lenders sufficient time to respond to complaints, whether or not claimants are participating in the redress scheme, as they should already have been investigating them.

The FCA also published a ‘Dear CEO’ letter that it had sent to lenders on 3 December 2025 outlining progress in the motor finance space.

12 December 2025

On 12 December 2025, the regulator’s redress scheme consultation closed.

Start your car finance claim now

This timeline of car finance mis-selling lays bare the extent of the FCA's work, the complexity of investigating historical wrongdoing by lenders across the motor finance sector, and the challenges of designing a redress scheme that adequately compensates affected consumers.

The regulator's redress scheme means that you will be able to claim any compensation for which you are eligible yourself, and at no cost. However, although we recognise and praise the FCA's work in investigating historical motor finance mis-selling and in designing the redress scheme, it remains of concern to us that the proposed scheme is lender-led and may still see many consumers miss out on receiving the compensation they are owed. This is one of several compelling reasons why you may wish to instruct a solicitor to bring your car finance mis-selling claim.

If you have yet to complain to your lender, you can register your car finance claim with Harcus Parker here.