Who do lenders have to contact under the motor finance redress scheme?

The Financial Conduct Authority’s (FCA) motor finance redress scheme does not require lenders to contact every former customer who entered into an agreement between 6 April 2007 and 1 November 2024. Whether a consumer will, or should, hear from their lender depends on whether they have already complained and whether their agreement falls within the scheme due to the presence of one of the commission arrangements covered by the rules.

As of July 2026, the position is also affected by the legal challenges brought against the scheme by Consumer Voice and three lenders. Parts of the scheme have been suspended by the Upper Tribunal, meaning that lenders are not currently required to follow the timetable published in Policy Statement PS26/3. However, the rules themselves still stand, and the regulator’s guidance after confirming the scheme’s partial suspension means that consumers may still hear from their lender in the coming months.

What do the redress rules say about contacting consumers?

PS26/3 states that lenders will have to contact:

• consumers who have already made a relevant motor finance complaint;
• consumers who have not complained but whose agreements fall within the scheme;
• some consumers whose agreements contain a relevant commission arrangement but whom the lender considers to be outside the legal time limit; and
• the representatives or beneficiaries of customers who have died.

How lenders must handle each case depends principally on whether the consumer has already complained.

How have the legal challenges affected contact deadlines?

Under the final rules, lenders were required to contact consumers who may be owed redress and have not complained by:

• 30 December 2026, for agreements beginning on or after 1 April 2014 up to and including 1 November 2024; and
• 28 February 2027, for agreements beginning on or after 6 April 2007 up to and including 31 March 2014.

In a statement published on 2 July 2026, the FCA confirmed the Upper Tribunal had made an order partially suspending its redress scheme and outlined that the legal challenges would be heard either on 14-18 December 2026 or 16-26 February 2027. Lenders do not have to calculate or pay compensation, or send communications about compensation owed, under the published scheme timetable while the partial suspension is in place. This means that consumers who are potentially owed compensation are unlikely to hear from their lender until the Upper Tribunal delivers its ruling. While FCA chief executive Nikhil Rathi told the Treasury Committee on 15 July 2026 that the regulator is ‘talking to lenders [and] some claims law firms as well about, where consumers want to move forward with the terms of the scheme and get compensation at the level of the scheme, them being able to do so in full and final settlement,’ it is unclear whether any lenders will proceed with making redress offers.

Some obligations remain in force during the partial suspension. Lenders must continue to identify relevant complaints and agreements. They must tell consumers who have complained if they are not owed compensation under the scheme by:

• 18 November 2026, where the agreement began on or after 1 April 2014, and the complaint was made by 30 June 2026; or
• 18 January 2027, where the agreement began before 1 April 2014, and the complaint is made by 31 August 2026.

Consumers who complain after those dates and are not owed compensation should hear from their lender within five months. These deadlines do not apply where the lender:

• considers the complaint to be out of time; or
• relies on the exception for contractual ties involving visible links between the lender, manufacturer and franchised dealer.

These exclusions apply as both mechanisms are subject to challenge and will go before the Upper Tribunal. The regulator has also said that it will only treat lenders as non-compliant if they take longer than seven weeks after these deadlines to provide a response to consumers.

If the redress scheme is upheld and the Upper Tribunal’s judgment is not appealed, the FCA expects compensation payments will begin during 2027.

Consumers who have already complained

Consumers who have already complained either directly or by instructing a solicitor do not need to complain again. Should the redress scheme proceed following the legal challenges, those consumers’ complaints will automatically be considered under the scheme rules. As of July 2026, consumers who have complained are only likely to receive a decision from their lender before the deadlines above if:

• they are not owed compensation; or
• lenders agree a mechanism with the regulator by which they can begin making redress offers.

Consumers with an existing complaint should tell their lender or representative if their contact details change to avoid their complaint stalling or delays in receiving any redress they may be owed.

Consumers who have not yet complained

Consumers who have not yet complained will not hear from their lender until the Upper Tribunal process concludes at the earliest. The only exception is if they complain in the meantime and their lender determines that they are not owed compensation. Consumers in this situation should hear from their lender by the deadlines outlined above where the complaint was made by the 30 June or 31 August 2026 cut-offs, or within five months where it was made after those dates.

Consumers who choose not to complain and to wait to see if their lender contacts them will only hear from their lender if their agreement falls within the scheme rules and contains at least one of the relevant arrangements covered by the scheme:

• a discretionary commission arrangement (DCA), which allowed the broker to adjust the interest rate on an agreement in order to earn a higher commission;
• a high commission arrangement, where the commission was at least 39% of the total cost of credit and at least 10% of the loan amount; or
• a contractual tie, where the broker was required to offer finance from a particular lender or to give that lender a right of first refusal, unless there were visible links between the lender, manufacturer and franchised dealer. This point is subject to challenge.

Receiving an invitation to join the scheme does not mean that a lender has decided that compensation is due; only that the lender has identified the agreement as requiring review. Consumers will normally have six months from receiving an invitation to respond to their lender. If the consumer opts in, the lender will have three months to assess liability and send a provisional redress decision to the consumer, who will then have a month to accept or challenge any such offer.

Under the scheme rules, lenders have six months from the end of the relevant implementation period to contact consumers who have not complained whose agreements may fall within the scheme. Given the legal challenges against the scheme, it is presently unknown when such a deadline will fall. However, we expect timelines to be similar in length should the scheme proceed. 

Who will not hear from their lender?

The FCA estimates that approximately 12.1 million agreements, 37% of those entered into between 6 April 2007 and 1 November 2024, are eligible for compensation under its scheme. Many consumers will therefore not qualify for compensation and will not receive any communication from their lender at all. Lenders will not generally have to contact consumers who have not complained where:

• the agreement does not contain one of the commission arrangements the scheme covers;
• the commission was £120 or less for agreements entered into before 1 April 2014, or £150 or less for agreements entered into from 1 April 2014 to 1 November 2024;
• no interest was charged under the agreement;
• the vehicle was leased under a Personal Contract Hire agreement rather than a credit agreement like Personal Contract Purchase or Hire Purchase;
• a complaint has already been decided by a court or the Financial Ombudsman Service (FOS) or where compensation has already been accepted; or
• the loan was above the scheme’s high value threshold for the year in question.

The minimum commission thresholds alone may exclude 1.1 million agreements from the scheme, an issue we examined in our article exploring why lower-income consumers may miss out on compensation.

Not hearing from a lender does not mean that a consumer has no claim. Lenders are using records that are nearly 20 years old, if they still exist at all, and some will not have current contact details for their former customers.

What happens if lenders cannot find their previous customers?

Many consumers will have moved home or changed their contact details since a relevant motor finance agreement ended. The FCA’s rules require lenders to take ‘reasonable steps’ to trace customers they need to contact, and to attempt contact via at least two channels, including where consumers are now thought to live abroad.

Lenders are not required to keep trying indefinitely to contact consumers once they have taken reasonable steps to do so. Consumers who are worried that previous motor finance lenders will not have their current details or will be unable to contact them do not need to wait to be found and can complain directly or via a professional representative.

What happens if a customer has died?

PS26/3 states that in this scenario, any redress liability may be owed to the deceased consumer’s estate. Where a lender becomes aware that a previous customer has died, the regulator expects it to take reasonable steps to contact a representative or beneficiary of the estate. The lender is likely to ask representatives for proof of authority to act, such as a copy of the deceased’s will or the grant of probate relating to their estate.

As with living consumers, representatives and beneficiaries do not need to wait to be contacted if they are aware that the deceased had entered into a motor finance agreement between 6 April 2007 and 1 November 2024. They can complain directly to the lender or via a professional representative on behalf of the deceased customer, providing as much information as possible about the deceased and their finance agreements.

Consumers whom lenders consider out of time

In a small number of cases, lenders may conclude that an agreement contains a relevant commission arrangement but that the claim is out of time. However, lenders cannot simply close these cases without telling anyone. They must inform the consumer and explain their reasons, while the consumer will retain the right to object and refer the matter to the FOS.

The treatment of cases deemed out of time is one of the issues subject to challenge.

What should you do if your lender does not contact you?

Silence does not mean that your agreement has been checked or that you are not eligible for redress. Under PS26/3, consumers who have not complained and have not been contacted can still complain to their lender until 31 August 2027, although this date is likely to change should the scheme proceed, depending on whether the FCA resets the implementation period.

You can complain to your lender at no cost, and you do not need to use a law firm or claims management company to receive compensation under the redress scheme.

Legal help may nonetheless be valuable if you:

• have had several agreements during the relevant period;
• cannot identify or remember who your lenders were;
• no longer have the paperwork or cannot remember any other details;
• are dealing with the estate of someone whom you believe entered into motor finance agreements during the relevant period; or
• believe your complaint also includes broader issues that fall outside the scheme, such as unaffordable lending or undisclosed commissions on add-on products like GAP insurance.

Register your motor finance claim with Harcus Parker

Harcus Parker can help:

• identify your motor finance agreements and the lenders involved;
• submit or progress your complaints;
• review lenders’ decisions and compensation offers, where relevant; and
• deal with multiple agreements, missing records or claims on behalf of someone deceased.

While you do not need to use professional representation for your motor finance claim, doing so means you are not reliant on your lender holding accurate records and current contact details, and may bring a range of other benefits.

Register your claim with Harcus Parker here.