The FCA Car Finance Redress Scheme Explained

How does the car finance redress scheme work?

Your lender does the checking and the maths: it finds your agreements, tests them against the FCA's rules and sends you a decision. The rules set six steps:

1. 1
   Find the agreements. The lender lists the complaints it has received and the agreements it holds from the scheme's dates.
2. 2
   Look for an unfair arrangement. The lender checks for a discretionary commission arrangement, high commission or a tie that you were not properly told about.
3. 3
   Presume unfairness and loss. The rules treat the relationship as unfair and assume you lost out, and the lender has to prove otherwise with evidence (PS26/3, paragraphs 1.20 and 1.21).
4. 4
   Work out the redress. The lender applies the FCA's formula to your agreement.
5. 5
   Send a provisional decision. The letter gives the amount and allows you 1 month to accept or challenge it.
6. 6
   Pay. The lender pays within 1 month of your acceptance, and adds 8% a year simple interest for any delay after that month (CONRED 5.4.38R and 5.4.39R).

Steps 3 to 6 are on hold during the legal challenge. Lenders still carry out steps 1 and 2, and still write to complainants who are not owed anything (Upper Tribunal suspension order, 1 July 2026).

Who does the scheme cover?

The scheme covers PCP, hire purchase and conditional sale agreements for a car, van, motorbike or campervan, taken out from 6 April 2007 to 1 November 2024, where commission was payable to the broker. The FCA estimates that 12.1 million agreements, 37% of those made in the period, are eligible. The start date decides which of two schemes applies:

Four more conditions apply to both schemes:

• Borrower: an individual, a sole trader, a partnership of 2 or 3 people or an unincorporated body (CONRED 5.1.1R).
• Residence: the borrower lived in the UK when the agreement started (CONRED 5.1.6R).
• Commission: commission was payable to the broker, even where it was never actually paid (FCA further information for firms, August 2026).
• Agreement status: finished and settled agreements are covered as well as running ones, because the start date is the test. The conditions concern the agreement, not the car, so a car you have since sold or part-exchanged still counts (CONRED 5.1.17R).

Which arrangements make an agreement unfair?

At least one of three arrangements must have been in place without proper disclosure: a DCA, high commission or a tie.

• DCA: the broker could adjust your interest rate to earn more commission.
• High commission: commission of at least 39% of the total charge for credit and at least 10% of the amount borrowed.
• Tie: the broker sent customers only to that lender, or gave it the first chance to lend.

None of the three counts where the commission was £120 or less (Scheme 1) or £150 or less (Scheme 2), or where the APR was 0%. A DCA stops counting where you were charged the lowest rate in its range. A tie stops counting where the lender was the car maker's own finance company, the dealer was a franchised dealer of that brand and the branding was clearly shown (CONRED 5.2.19R and 5.2.20R). The lender has to prove an exception with evidence, and without that proof the arrangement counts.

What does the scheme not cover?

Leases, very large loans and cases already settled sit outside the scheme, and you can still complain about most of them in the normal way. Five groups fall outside:

• personal contract hire, because a lease is not a credit agreement;
• agreements that started before 6 April 2007 or after 1 November 2024;
• loans larger than 99.5% of that year's loans, from £38,000 in 2008 to £82,000 in 2023 and 2024, unless the vehicle was built or adapted for accessibility;
• agreements over £25,000 made before 6 April 2008, and agreements over £25,000 taken out for business purposes;
• cases already decided by the Financial Ombudsman Service or a court, and cases where you accepted compensation.

A high value loan stays open to an ordinary complaint: the FCA says you complain to the lender or broker first, then to the free Financial Ombudsman Service. A small group of cases is out of time. Lenders can exclude agreements with high commission only that ended before 26 March 2020, where the paperwork clearly said commission was payable (PS26/3, paragraph 1.23). The lender has to explain that decision, and you can object and then go to the Ombudsman.

How is redress worked out?

Most agreements get the average of two figures, the commission plus interest and an estimate of the extra interest you paid, cut to the lowest of three caps. The rules give one of three outcomes:

The estimated loss reduces your APR by 17% for agreements from 1 April 2014 and by 21% for earlier ones. Compensatory interest runs at the Bank of England base rate plus 1 percentage point, with a minimum of 3% a year.

The FCA says about 1 in 3 results are capped, and puts the average at £829 per agreement: an average across all eligible agreements, not a personal figure (FCA, 30 March 2026). It expects lenders to pay about £7.5 billion in total, assuming 75% of eligible people take part. How much compensation for mis-sold car finance will I get? walks through the method in plain steps, and the car finance claim calculator applies it to your own figures.

Are you in the scheme automatically, or do you opt in?

You are in automatically after a complaint made before the implementation period ended; without one, your lender writes to invite you, and you opt in within 6 months.

Sources: CONRED 5.2.9R and 5.2.11R, and PS26/3 for the 31 August 2027 date. The invitation letters are not on the Tribunal's list of rules kept in force on 1 July 2026, so lenders do not have to send them while the challenge is heard.

The FCA calls a complaint to your lender "the best thing you can do, if you have concerns", so there is no need to wait for a letter. Old bank statements, the dealer or your credit file show who the lender was, and Equifax's Car Finance Checker holds most car finance records back to 2007 (FCA). To complain now, follow How to claim mis-sold car finance yourself, for free.

How will your lender contact you?

Your lender contacts you in writing, by letter or by email, because under the scheme the lender, not the FCA, decides each case. PS26/3 dropped the consultation's plan to require recorded delivery. The letters arrive in this order:

1. 1
   An invitation to opt in, sent to people who have not complained where the lender found an unfair arrangement.
2. 2
   A "not owed" decision, sent where the lender finds no unfair arrangement or the case is outside the scheme. These are the only decision letters going out during the suspension: by 18 November 2026 or 18 January 2027 for early complainants, and within 5 months for later complaints.
3. 3
   A provisional decision with an amount, giving you 1 month to accept or challenge it.
4. 4
   Payment, within 1 month of your acceptance.

A decision you disagree with goes back to the lender for review first. The free Financial Ombudsman Service comes next, by the date given in the lender's letter, and it checks whether the lender followed the scheme rules; a court claim stays open too (FCA).

Check any letter, email or call against the FCA's list of lenders before you reply. A lender can ask for your account number and sort code to pay you. The FCA says to share them only when you are certain who you are dealing with, and never to share a PIN or password. The three lenders challenging the scheme, Volkswagen Financial Services, Mercedes-Benz Financial Services and CA Auto Finance, must write to each of their complainants to explain the challenge and the delay (FCA, 2 July 2026).

The FCA rules on car finance: PS26/3, CONRED 5 and CONRED 6

Policy statement PS26/3, published on 30 March 2026, set up the redress scheme for car finance as two schemes: CONRED 6 for Scheme 1 and CONRED 5 for Scheme 2. The FCA made them under sections 404 and 404A of the Financial Services and Markets Act 2000. The documents behind the scheme:

The rules give the scheme no end date. PS26/3 changed four things from the consultation:

• one scheme became two, split at 1 April 2014;
• the high commission test rose from 35% to 39% of the total charge for credit, with the 10% of the loan unchanged;
• one 17% APR reduction became 17% from 1 April 2014 and 21% before that date;
• three caps arrived, along with a £0 result for the lowest 5% of APRs.

The calculator methodology page lists every constant in these rules and the tests the calculator passes.

Why does the scheme exist?

The scheme exists because the courts and the FCA found that many lenders did not tell customers about commission arrangements that affected what they paid. The FCA says this broke the law and its own rules in force at the time.

The Court of Appeal ruled on 25 October 2024 that brokers could not take commission without the customer's informed consent ([2024] EWCA Civ 1282). The Supreme Court allowed the lenders' appeals on the bribery and fiduciary claims on 1 August 2025, because car dealers acting as brokers did not owe customers a fiduciary duty ([2025] UKSC 33).

Mr Johnson still won under section 140A of the Consumer Credit Act 1974, the unfair relationship test. His commission was 55% of the charge for credit and 25% of the amount borrowed, and an undisclosed tie gave the lender first refusal. The court ordered the commission repaid with interest.

The FCA chose a scheme over individual complaints. It told the Treasury Committee on 8 June 2026 that a complaints-led approach would cost lenders over £6bn more and take three years.

Is there an FCA car finance contact number or login?

No. There is no FCA car finance login, claim form or claims phone number: you complain to your lender. The FCA's car finance page sends every complaint to the lender, and its list of lenders gives each one's contact details, a template letter or email, or a link to the lender's own form.

The FCA runs email updates on car finance complaints, and its contact page gives the FCA's general contact number, online form and postal address. A caller who says they are the FCA and asks for a payment, a transfer or your PIN is a scammer: the FCA says it never asks for these.

Questions about the scheme

Three questions about who runs the scheme, the court route and how long the scheme lasts, answered from the FCA's rules as of 13 October 2026.

Estimate your agreement under the scheme rules

The calculator applies the rules on this page to your own agreement: the start date, the amount borrowed, the APR, the term and, where you know it, the commission. It shows every step and names the rule behind any £0 result.

You can complain to your lender or use the FCA scheme for free.

Last checked 13 October 2026 against PS26/3, CONRED 5 and 6, the Upper Tribunal's orders of 1 July 2026 and the FCA's statements of 30 March and 2 July 2026. Car Finance Claim Calculator is not the FCA, a claims company or a law firm.

Written and checked by Tirion Oman. Spotted an error? Tell us on the contact page; the editorial policy explains how we check and correct figures.