What the FCA’s motor finance redress scheme will not compensate you for

Important update: The FCA redress scheme is partially suspended

This article reflects the position as at 9 October 2026. 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 on 14-18 December 2026 or 16-26 February 2027. Lenders are not currently required to calculate or pay redress, and payments are not expected to begin until 2027 at the earliest. If you have complained and your lender considers you are not owed compensation, it must respond by the applicable deadline, except for complaints it considers were out of time when the scheme was made and cases relying on the captive-lender contractual-tie exception.
• 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: The normal scheme timetable is affected by the partial suspension. Lenders must still respond to complainants they consider are not owed compensation, subject to exceptions. 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) published its final motor finance redress scheme rules on 30 March 2026. The scheme addresses specified commission-related unfairness. It is now partially suspended while legal challenges are considered, and lenders are not currently required to calculate or pay scheme redress.

As such, it will not require lenders to assess every possible loss or every potential complaint arising from a motor finance agreement and the broader sales process around it. This matters in practice because many consumers focused on commission-related redress may also have separate grounds for complaint that fall outside the scheme, even where those issues caused real financial harm. 

With that context in mind, we will now explore several key categories of potential loss and issues the redress scheme may not compensate you for. These are areas that a solicitor can review with you and, where appropriate, pursue through routes outside the scheme.

Unaffordable or irresponsible lending

The regulator’s redress scheme may help you receive compensation for undisclosed or high commissions; however, there may also be a question around whether: 

• your lender should have offered you finance at all;
• your agreement was affordable given your circumstances at the time; and
• your lender carried out adequate affordability and risk checks.

These are distinct questions, typically assessed using different evidence from that used to determine your eligibility for commission-related motor finance redress, and they may lead to additional redress depending on the facts.

Mis-sold add-ons

When you entered into a car finance agreement at the dealership, you may have also been sold add-on products as part of the transaction, including:

• GAP insurance;
• extended warranties;
• service and MOT plans; and
• cosmetic, alloy and tyre cover.

There have been concerns and allegations that commission-driven incentives associated with various add-ons, including GAP insurance, may have increased prices or influenced how car dealers sold these products, separate from commission-related motor finance redress.

Negative equity and refinancing cycles

You may have experienced harm from negative equity being rolled into subsequent motor finance agreements, or from longer terms used to keep your monthly payments manageable. Even where commission-related redress is payable, the scheme is not designed to unwind a chain of credit decisions or reconstruct the overall cost impact you might have experienced across multiple agreements.

Consequential losses

You may have experienced knock-on, consequential harm beyond the difference between what you paid and what you might have paid if commission had been adequately disclosed and priced, such as:

• arrears charges or default fees;
• debt collection charges or fees;
• having to refinance at higher rates or being unable to access credit at lower rates; and
• a loss of savings buffers and cascading borrowing.

The final scheme uses a standardised remedy and does not separately assess each consumer’s consequential losses. It also removed the proposed route to a higher compensatory interest rate based on additional borrowing costs. Scheme interest is simple interest based on annual average Bank of England base rate plus one percentage point, subject to a minimum 3%; the prescribed rate cannot be challenged.

If you believe motor finance overpayments caused additional financial loss, any separate claim needs an assessment of its legal basis, causation, evidence and time limits. Merely showing that you incurred other debts does not establish a right to extra compensation. Settlement terms may affect your options, and you cannot recover the same loss twice.

Claims excluded because they fall outside the scheme’s scope

The final rules define eligible agreements, relevant commission arrangements, exceptions and exclusions. Being unhappy with an agreement does not by itself establish eligibility. For example, the scheme does not cover every type of vehicle finance or agreements outside its date range.

However, even if your car finance agreement is not eligible for compensation within the regulator’s redress scheme, you may still have grounds to bring a complaint, both in relation to your motor finance agreement as well as for matters like irresponsible lending and the mis-selling of add-ons.

A complaint outside the scheme may be considered by the lender and, where it falls within its jurisdiction and time limits, the Financial Ombudsman Service (FOS). FOS must apply the scheme rules to a complaint about a scheme decision; it is not a route to replace the prescribed scheme interest rate with a higher one. A solicitor can advise on whether a separate legal claim is available.

Evidence gaps and missing records

Missing paperwork or a change of address does not automatically prevent a claim. It is sensible to complain directly, keep your contact details up to date and provide any agreement or payment records you still hold rather than assume the lender will reach you.

The final rules require lenders to take specified steps to gather evidence and address gaps in their records, including obtaining relevant broker records. They provide for reconstruction and specified alternative values where information remains missing. Consumers may query the information and calculation used in a decision.

The FCA continues to encourage consumers to complain now. The general pause on complaint responses ended on 31 May 2026, although the later partial suspension affects scheme assessment and payment duties. Some response obligations remain in force; see the FCA’s current consumer guidance for the applicable position.

Distress, inconvenience, and time spent pursuing the issue

The final scheme calculates redress using its prescribed financial remedy. It does not provide an individual award for all the distress, inconvenience or time a consumer may have experienced. An award for distress or inconvenience may be available in a separate complaint within FOS’s jurisdiction, depending on the issues and circumstances; it is not an automatic addition to scheme compensation.

If you believe there are separate failings outside the scheme, a solicitor can help assess whether they support another complaint or claim. Distress or time spent alone does not establish an entitlement to compensation.

What to do if you think you have additional losses outside the scheme

You can complain to your lender now without paying a solicitor or claims management company. If you already have a complaint about the agreement, you do not need to submit a duplicate. Payments under the scheme are not expected before 2027 at the earliest, and the timetable may change following the legal challenges.

If you choose to pursue a complaint yourself, you may receive a settlement offer from your lender. Whilst this may enable you to receive compensation at no cost, before accepting an offer, you should consider:

• whether the offer is limited to commission-related redress;
• whether the lender is proposing a ‘full and final’ settlement; and
• whether you have concerns about irresponsible lending, mis-sold add-ons, or consequential losses connected to your motor finance agreement.

If you are unsure about the practical and legal impact of accepting an offer from your lender, you should seek legal advice.

Register your car finance claim with Harcus Parker

Alongside a commission-related complaint, you may wish to understand whether other issues connected to your agreement support a separate claim outside the final scheme.

If you instruct us to manage your car finance claim, we can review your circumstances, explain what the FCA's scheme covers, and advise on routes to pursue additional redress where issues fall outside the scheme's scope.

Register your car finance claim with Harcus Parker here.