FCA confirms motor finance complaints pause to end on 31 May 2026

The Financial Conduct Authority (FCA) has confirmed that the current pause on car finance complaint handling will end on 31 May 2026.

In a statement published alongside Policy Statement PS25/18: Changes to handling rules for motor finance complaints, the regulator confirmed that it had decided to set this deadline two months earlier than the date of 31 July 2026 it had proposed in its recent consultation on extending the pause, which was due to expire on 4 December 2025, to reflect its ‘commitment to ensuring consumers receive fair and timely outcomes.’

Why has motor finance complaint handling been paused?

The FCA first paused car finance complaint handling in relation to discretionary commission arrangements (DCAs) on 11 January 2024, when it launched its formal investigation into car finance mis-selling and the historical use of DCAs, initially setting a resumption date of 25 September 2024.

On 30 July 2024, the regulator published proposals and launched a consultation on extending this date to 4 December 2025, confirming this extension on 24 September 2024.

Following the Court of Appeal’s 25 October 2024 ruling in the Johnson, Wrench and Hopcraft test cases, the FCA subsequently extended the pause on complaint handling to cover non-DCA cases.

The confirmed date for the resumption of motor finance complaint handling, 31 May 2026, applies to both DCA and non-DCA complaints.

Will this impact the FCA’s car finance redress proposals?

In its statement regarding the resumption of complaint handling, the regulator noted that it is likely to proceed with a formal redress scheme. The FCA published its proposed redress scheme rules and a consultation paper on 7 October 2025; that consultation remains open until 12 December 2025.

The regulator has also confirmed that it will not bring forward the 31 May 2026 date but will aim to align any dates within its final redress scheme rules, which it says it will publish before the end of March 2026, around this timeline.

Is 31 May 2026 relevant if there will be a redress scheme?

Yes, as consumers may or may not choose to participate in the redress scheme, depending on the final rules. For example, the All-Party Parliamentary Group (APPG) on Fair Banking’s November 2025 report titled Car Finance Scandal: Assessing Redress highlighted that some claimants could potentially achieve a compensation award of more than double the FCA’s estimate of ‘around £700 per agreement’ if they were to take their case to court.

In practice, the resumption of complaint handling means that firms will, in most cases, have up to eight weeks from 31 May 2026 to provide a final response to complaints outside of the redress scheme; consequently, consumers in this situation should have heard from their lender by or before 26 July 2026.

Are the dates different for those in the redress scheme?

The FCA’s current redress proposals state that lenders should contact consumers who have already made a complaint within three months of the start of the scheme. Where lenders find they owe money to consumers who have not complained, they must contact them within six months of the scheme launching.

Although the regulator may wish to align the dates of the redress scheme with those around the resumption of car finance complaint handling, it may have only a very narrow window to do so if it does not publish its final rules until the end of March 2026.

In its statement regarding the resumption of car finance complaint handling, the FCA confirmed that it intends to set out in its final rules how firms should deal with complaints that involve elements both within and outside the scope of the redress scheme.

Is it worth waiting for lenders to make contact?

Consumers who do not wish to seek professional representation for their car finance mis-selling claim and plan to participate in the FCA's proposed redress scheme may wait for their lender to contact them; however, there may be several potential downsides to doing so.

As the regulator’s proposals are for the scheme to be ‘lender-led,’ anyone taking this route would be relying on the same firms that mis-sold their car finance to identify them and to calculate their compensation correctly. Consumers with agreements that ended more than six years ago, or who have moved house or changed their name, may be at risk of their lender being unable to locate them.

In addition, as the regulator’s proposals indicate that those with existing complaints will be prioritised and contacted within three months of the commencement of the redress scheme, should it go ahead, it is generally favourable to begin a claim as soon as possible.

What are the benefits of seeking professional representation?

The FCA’s proposed redress scheme means that it is possible to bring a car finance mis-selling claim yourself and at no cost; however, there are several reasons why you may benefit from seeking professional representation.

For example, in addition to building your motor finance claim, a solicitor will also be able to investigate whether you have grounds to bring additional claims, from the mis-selling of additional products commonly sold alongside car finance, like GAP insurance and cosmetic cover, to irresponsible lending. As the regulator's current proposals stand, these elements would fall outside of the scope of the redress scheme but could be of significant value.

Even if you do not have grounds for additional claims, if nothing else, instructing a solicitor may at least help to ensure that you receive a compensation award that is an accurate reflection of your loss, and not based on a lender’s best guess or average figure.

Register your car finance claim with Harcus Parker here.