Millions of consumers are gearing up to receive car finance compensation, with payments anticipated to commence from mid-2026, or are considering whether to bring a mis-selling claim.
The Financial Conduct Authority’s (FCA) proposed motor finance consumer redress scheme is intended to make compensation more accessible for people harmed by car finance mis-selling.
The Financial Conduct Authority’s (FCA) proposed car finance redress scheme, which is likely to see compensation payouts begin in mid-2026, is the culmination of years of work in the motor finance space.
Mercedes-Benz is bracing for a £424 million loss relating to motor finance redress payments, according to a report published by The Times on New Year’s Day.
Advocacy group Consumer Voice has called on the Financial Conduct Authority (FCA) to ensure that consumers are put first in its car finance redress scheme, after publishing its response to the regulator’s recently closed consultation
In Technical Annex 2: State of Competition in the Motor Finance Market, published by the Financial Conduct Authority (FCA) alongside its car finance redress scheme proposals on 7 October 2025, the regulator notes that personal contract purchase (PCP) finance is the most popular type of motor finance arrangement for new vehicles.
The Financial Conduct Authority’s proposed motor finance redress scheme – covering an estimated 14.2 million car finance agreements taken out between 6 April 2007 and 1 November 2024, with average compensation of around £700 per agreement expected to be paid to consumers – has triggered a significant backlash from lenders, who are facing payouts totalling billions.
Lenders had mobilised their defences long before the Financial Conduct Authority (FCA) published its car finance redress scheme proposals and disclosed its estimate that 14.2 million motor finance agreements had been mis-sold between 6 April 2007 and 1 November 2024, with 11.4 million of those involving discretionary commission arrangements (DCAs).
The Financial Conduct Authority (FCA) has confirmed that the current pause on car finance complaint handling will end on 31 May 2026.
A prominent King’s Counsel who was involved in April 2025’s Supreme Court hearings in the Johnson, Wrench and Hopcraft test cases has warned that a judicial review of the Financial Conduct Authority’s (FCA) car finance redress proposals is ‘inevitable.’
We would be very happy to discuss any other questions you might have. You can call us on 0203 070 2822 to speak to a member of the team or email info@motorfinance.harcusparker.co.uk and someone will get back to you.