Motor finance redress · updated September 2026
The car finance scheme is free. A claims company will still ask for 30%.
Twelve million finance agreements qualify for compensation under the FCA's motor finance scheme, at about £830 each on average. Lenders have to find you and pay you. Yet the adverts keep coming, because a claims company can legally keep up to 30% plus VAT of what was always yours. Here is what the scheme pays, what the companies charge, and how the legal challenge changes the timing.
Source: FCA, motor finance consumer redress scheme (PS26/3), 30 March 2026.
What a claims company can take
Since March 2022 the FCA has capped what claims management companies can charge on financial-services claims. The cap slides with the size of the award:
| Your award | Max fee | Cap, ex VAT | Cap, inc VAT |
|---|---|---|---|
| £1 to £1,499 | 30% | £420 | £504 |
| £1,500 to £9,999 | 28% | £2,500 | £3,000 |
| £10,000 to £24,999 | 25% | £5,000 | £6,000 |
| £25,000 to £49,999 | 20% | £7,500 | £9,000 |
| £50,000 and over | 15% | £10,000 | £12,000 |
Take the scheme's average, £830. The cap allows £249 plus VAT, so £298.80, leaving you £531.20. Sign up two cars and the company keeps close to £600 for filling in the same form the lender is already required to send you. Two caveats from the FCA's own page: the cap does not apply if the company pursues the claim in court, and firms regulated as solicitors sit under the SRA rather than the FCA. In May 2026 the FCA opened a market study into claims management services, after removing or changing more than a thousand misleading motor finance adverts.
What the scheme pays, and when
- Who qualifies. Finance on a car, van, motorbike or campervan taken out between 6 April 2007 and 1 November 2024, where you were not clearly told about a discretionary commission arrangement, a high commission (39% or more of the total cost of credit and 10% of the loan), or a tie between the broker and one lender. Commission under £120 (pre-April 2014) or £150 (after) is treated as fair. Leases, business loans and unusually large loans are out.
- How much. Usually the average of the commission paid and an estimated loss (17% off the APR for agreements from April 2014, 21% before), plus at least 3% a year compensatory interest. Very high commission with another unfair factor returns the full commission.
- Dates. Lenders had until 30 June 2026 (agreements from April 2014) or 31 August 2026 (earlier ones) to get ready, then three months to answer everyone who has complained and six months to contact anyone else likely to be owed money. If nobody contacts you, the deadline to claim is 31 August 2027.
- The legal challenge.Parts of the scheme were suspended by the Upper Tribunal on 2 July 2026, with a hearing due in December 2026 or February 2027. Lenders do not have to pay under the scheme until that ends; if it is upheld, payments are expected in 2027. Complaints already lodged are handled first, which is why the FCA's advice is to complain now.
The free route
- 1Find the lender, not the dealer. It is the finance company named on your agreement. The FCA keeps a list of lenders with their complaint contacts.
- 2Write to the lender. Give the agreement number or vehicle registration and the dates, say you believe commission was not properly disclosed, and ask them to assess the agreement under the FCA scheme and pay any redress due. No evidence beyond identifying the agreement is needed; they hold the records.
- 3Wait for the response. Under the scheme the lender must tell you whether you are owed money and how much. If you are refused or ignored, the Financial Ombudsman Service is free.
- 4Do not sign anything that assigns a percentage of the award. Nobody can get you a higher payout than the scheme's formula produces.
Send the complaint yourself, in the lender's language.
Reclaim writes the letter that cites the scheme and asks for the assessment. You send it, you keep 100% of the £830.
FAQ
How much can a claims company charge for a car finance claim?
For financial-services claims the FCA caps the fee by the size of your award. On the scheme's average payout of about £830 the cap is 30% plus VAT, so up to £299 of an £830 award. The cap does not apply if the company takes your case to court, and law firms are regulated by the SRA rather than the FCA, so read the terms before you sign.
Is the FCA car finance scheme still going ahead?
The FCA confirmed the scheme on 30 March 2026. It was legally challenged on 1 May 2026 and the Upper Tribunal suspended parts of it on 2 July 2026, with a hearing due in December 2026 or February 2027. Until that concludes, lenders do not have to calculate or pay compensation under the scheme. The FCA's advice while it waits: complain to your lender anyway, because complaints made now are dealt with first once payments start.
Who is eligible for car finance compensation?
Anyone who financed a car, van, motorbike or campervan between 6 April 2007 and 1 November 2024 and was not clearly told about a discretionary commission arrangement, a high commission (39% or more of the total cost of credit and 10% of the loan), or a tie between the broker and one lender. Personal contract hire leases, cases already decided by the Ombudsman or a court, and unusually large loans are excluded.
How is the compensation worked out?
For most people it is the average of two numbers: the commission paid, and an estimated loss based on a discount to the APR (17% for agreements from April 2014, 21% for earlier ones), plus compensatory interest of at least 3% a year. Where the commission was very high, 50% or more of the cost of credit and 22.5% of the loan, and another unfair factor applied, the whole commission comes back. Around one case in three will be capped so nobody ends up better off than a fair deal would have left them.
Do I have to do anything if I have not complained?
Lenders must contact people who are likely to be owed money within six months of the scheme's implementation date. If nobody contacts you and you think you qualify, you have until 31 August 2027 to make a claim yourself. Complaining now costs nothing and puts you at the front of the queue.
Sources
- ·FCA, car finance claims (consumer page, updated 18 August 2026)
- ·FCA, list of motor finance lenders and how to complain
- ·FCA press release, millions of car finance customers to get payouts (30 March 2026)
- ·FCA, PS26/3 motor finance consumer redress scheme
- ·FCA, motor finance scheme partially suspended (2 July 2026)
- ·FCA, using claims management companies and the fee cap
- ·FCA, MS26/2 claims management services market study (19 May 2026)
A self-serve tool, not a law firm or a claims management company. General information, not legal advice.