FCA motor finance update: What it means for your claim

Important update: The FCA redress scheme is partially suspended

This article was written before recent developments around the FCA’s redress scheme. If you entered into a motor finance agreement between 6 April 2007 and 1 November 2024, please note the following:

• The redress scheme is partially suspended: The Upper Tribunal will hear four challenges to the scheme between 16 and 26 February 2027. Lenders are not currently required to calculate or pay redress, and payments are not expected to begin until 2027 at the earliest. Your lender should write to you if you have already complained and you are not owed compensation, although the FCA says some consumers may not be told until the legal process concludes.
• Revised eligibility estimate: The FCA now estimates that 12.1 million agreements are eligible for compensation, down from the 14.2 million estimated in its 2025 consultation.
• Increased compensation estimate: The FCA now anticipates average redress payouts of £829 per mis-sold agreement.
• Compensatory interest changes: The regulator has introduced a minimum 3% floor for compensatory interest; however, the rate applied to awards within the redress scheme can no longer be challenged.
• You may not hear from your lender: If the scheme proceeds, contact obligations also cover certain consumers who have not complained, including those potentially owed compensation and certain time-barred cases. If you do not hear from your lender, you could still have a valid claim but risk missing out entirely.

The Financial Conduct Authority (FCA) has this morning (5 November 2025) published an update on the progress of its redress scheme consultation, which it launched on 7 October 2025.

What did the FCA announce on 5 November 2025?

This morning, the regulator announced it is extending the deadline for its redress scheme consultation from 18 November 2025 until 5pm on 12 December 2025.

This extension gives lenders, consumer groups, and professional representatives like us more time to provide detailed feedback on the proposals.

What responses has the FCA received to date?

The FCA’s statement noted that it has received significant feedback on several critical elements of its proposals, many of which are of concern to us and to other analysts, including:

• The methodology for calculating redress.
• The period the redress scheme will cover.
• How independent bodies like the Financial Ombudsman Service can best ensure confidence in the scheme.
• How smaller lenders or lenders with a low volume of agreements where redress is due can participate in the scheme cost-effectively.
• Fraud prevention.

When does the FCA plan to publish the final redress scheme rules?

The regulator says it expects to publish final rules in February or March 2026.

When will I receive any compensation that is due?

We now expect that car finance redress payments will begin in mid-2026.

Is my car finance complaint being dealt with?

Car finance complaint handling is currently paused until 4 December 2025, which means lenders do not have to recommence sending final responses to most car finance complainants until at least this date.

The regulator has been consulting on extending this pause, and it is our expectation the FCA will announce an extension to align with its publishing of the final rules of its redress scheme.

If you have started your car finance claim with us, we are continuing to work to secure any redress that is due.

How do I start a car finance claim?

You do not need to instruct a solicitor and can claim yourself at no cost, although there are many reasons you might wish to consider seeking professional representation, including concerns about the fairness of the proposed redress scheme and the risk that lenders’ calculations may leave you short changed.

If you wish to check your eligibility and register your claim with Harcus Parker, you can do so here.