What can motor finance claimants learn from the PPI scandal?

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.

When the Financial Conduct Authority (FCA) announced the findings of its PPI complaints deadline final report in April 2020, it said that more than 32.4 million complaints had been made to firms and that, at that time, over £38 billion had been paid in redress. This was described by Jonathan Davidson, then the regulator’s Executive Director of Supervision, Retail and Authorisations, as ‘the largest consumer redress exercise in the UK’s history’.

Motor finance has often been spoken of in similar terms since the FCA announced plans to undertake work in the market on 11 January 2024, and particularly after the Court of Appeal ruling, handed down on 25 October 2024, in the Johnson, Wrench and Hopcraft test cases. The Supreme Court decision in those cases, handed down on 1 August 2025, followed by the regulator’s redress scheme consultation and final rules, reduced the likely scale of eligible complaints and compensation. However, the structural process remains highly comparable, providing valuable lessons about what happens while outcomes for consumers remain uncertain. We previously touched on the relationship between PPI and motor finance in our analysis of Plevin claims.

Lenders have challenged the regulator in a similar situation before

The FCA’s motor finance consumer redress scheme is partially suspended, pending the hearing of the four legal challenges that have been brought against the scheme by Consumer Voice, represented by Courmacs Legal, and three lenders: Mercedes-Benz Financial Services UK, Volkswagen Financial Services UK, and CA Auto Finance. While some of the coverage around the challenges has treated them as extraordinary and a danger to consumers’ prospects of receiving redress, it is worth reflecting on what happened when the PPI complaint handling rules were challenged and what is already different in relation to the motor finance scheme.

In August 2010, the Financial Services Authority (the FCA’s predecessor) published its final redress rules on how firms should handle PPI complaints. Those rules were challenged by the British Bankers’ Association (BBA) in judicial review proceedings heard at the High Court from 25 to 28 January 2011, with the challenge dismissed on all grounds by Mr Justice Ouseley on 20 April 2011. Lloyds Banking Group subsequently withdrew from the appeal on 5 May 2011 and announced it had set aside £3.2 billion to pay PPI compensation. Days later, on 9 May 2011, the BBA confirmed that it would not appeal against the judicial review outcome. PPI redress payments then continued throughout most of the decade, although some Plevin cases remain live today.

Despite those challenges to the motor finance scheme, things have already progressed beyond the equivalent point with PPI. Many lenders, including Lloyds, have declined to bring a legal challenge against the scheme and are preparing to pay redress, even while criticising the regulator’s actions throughout its work.

The broader point is that a legal challenge to a redress regime is not unusual. While we make no prediction on how the Upper Tribunal will rule on the challenges it will hear, the FCA has informed lenders that they should continue to prepare either to deliver the scheme or to resume complaint handling in the usual way while the scheme remains partially suspended. Even if the scheme is quashed entirely, that is unlikely to end the prospect of consumers receiving motor finance redress. Consumers would still be able to complain to their lender, refer a complaint to the Financial Ombudsman Service, or bring a claim in court.

Provisions tell you what lenders expect, not necessarily what they admit

Lloyds made its PPI provision four days before the BBA abandoned the industry’s challenge, and while an appeal was still possible.

A similar pattern is visible now. Lenders have collectively set aside billions of pounds for motor finance redress, and several have increased their provisions more than once while continuing to argue that the regulator is overreaching. While a provision is an accounting judgment about probable cost rather than an admission of liability, it remains a reasonable indication of what a lender expects to pay.

PPI demonstrated that it is better to act sooner rather than later

The most useful lesson for consumers from the PPI scandal is the distribution of when people complained, particularly when considered alongside the FCA’s motor finance scheme rules.

• During the final 14 months of the regulator’s two-year awareness campaign highlighting the complaints deadline, 8.9 million PPI complaints were submitted.
• During the first 10 months of the campaign, 3.7 million PPI complaints were submitted.
• In August 2019 alone, the final month before the complaints deadline, firms received 1.4 million complaints in four weeks.

The FCA found in its Payment protection insurance complaints deadline – Final Report that this concentration put ‘significant extra pressure’ on firms’ operations and on ‘their ability to deliver prompt decisions on enquiries and complaints’. The regulator had to engage with the industry to ensure that consumers who did not act until close to the deadline did not miss out, which led firms to convert checking enquiries into complaints automatically. More than one million complaints were created that way.

The vital point is that, should it proceed, the FCA’s motor finance redress scheme will also have a deadline. Under the final rules published in Policy Statement PS26/3 on 30 March 2026, consumers who are not contacted by their lender have until 31 August 2027 to complain if they wish to join the scheme. That date was set before the scheme was partially suspended and is likely to move. Once that deadline passes, whenever it falls, consumers who have not complained are likely to lose access to the scheme, whatever the merits of their case. Other routes to compensation may still be available, but they carry their own time limits and depend on the circumstances of the individual agreement. Complaining before the deadline avoids the question entirely.

Nor should it be assumed that the regulator would take similar steps to those it took to ensure everyone could register their PPI complaint. The FCA has consistently encouraged consumers to complain directly to their lender as soon as they can, and we would echo that advice.

Where the comparisons between PPI and motor finance end

It is easy to overstate the parallels between PPI and motor finance. Beyond the fact that both are mass consumer redress events, there are several striking differences in how they have unfolded.

PPI had no industry-wide redress scheme

PPI redress was complaint-led throughout. The FCA’s motor finance scheme is designed to identify eligible consumers and requires lenders to contact those who have not already complained and who may be eligible for compensation. This is a materially better starting position for someone who does not realise they may be owed compensation and takes no action.

The PPI complaints deadline was set years in advance

In contrast, the timing of motor finance redress remains genuinely uncertain. An Upper Tribunal ruling upholding the scheme may be appealed, while if the scheme is materially changed or quashed entirely, the FCA will need to decide what to do next.

The eligibility tests are different

PPI had a 50% commission ‘tipping point’. Motor finance has no single, direct equivalent. The nearest comparison is the regulator’s high-commission test, which requires commission of at least 39% of the total cost of credit and at least 10% of the loan, but that is only one of the three unfair features. Agreements can also be deemed unfair due to the presence of either a discretionary commission arrangement (DCA) or a contractual tie.

Motor finance is not simply PPI repeated. Any similarities are in how these exercises unfold rather than in the law or regulatory frameworks.

What this means if you have not yet complained

The PPI experience offers three reasons to bring a complaint as soon as you can.

1. Complaining costs nothing, and you do not need to wait for the Upper Tribunal. You can complain directly to your lender at no cost, and your lender will have to deal with your complaint at some stage, irrespective of the outcome of the Upper Tribunal proceedings.
2. It puts your complaint in a queue, rather than a surge. Even while the redress scheme remains partially suspended, lenders should still tell you if you have complained and they do not believe you are owed compensation. Lenders have no equivalent obligation to consumers who have yet to complain.
3. It does not depend on your lender identifying and contacting you. If you do not complain proactively, you will only hear from your lender if it is able to identify you and determines that you are potentially owed money, using records that may be incomplete or nearly 20 years old.

Register your motor finance claim with Harcus Parker

You do not need professional representation to complain to your lender or to receive any motor finance compensation you are owed, and you can do so at no cost.

If you choose to instruct Harcus Parker, we can:

• identify your motor finance agreements entered into between 6 April 2007 and 1 November 2024, even if you no longer have any paperwork or cannot remember who your lenders were;
• request disclosure of any commission you paid;
• review and challenge a decision that you are not owed compensation, or, should the scheme proceed, your lender’s calculations if you are; and
• investigate any potential further claims that fall outside the scheme framework entirely.

Instructing a solicitor does not guarantee that you will receive compensation or that you have an eligible claim.

Learn more about the benefits of instructing a solicitor or check your eligibility and register your motor finance claim with us here.