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The Financial Conduct Authority’s (FCA) proposed redress scheme is intended to deliver compensation at scale to consumers affected by commission-related mis-selling. However, while that scale may help many people access compensation more easily, it also means that the scheme must draw boundaries and only cover defined, ‘in scope’ elements.

Many consumers affected by car finance mis-selling will receive compensation offers directly from their lenders under the Financial Conduct Authority’s (FCA) proposed redress scheme. A prompt offer may appear attractive, particularly if you are looking for certainty and speed after hearing for years that you may be eligible for compensation.

Car dealers and other third parties acting as car finance brokers are central to the significant mis-selling identified by the Financial Conduct Authority (FCA) as having occurred between 6 April 2007 and 1 November 2024. However, that raises a natural question: why are the lenders primarily being held accountable for what the FCA estimates will be an £8.2 billion redress bill?

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.

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).