Car finance redress scheme update

The FCA plans a redress scheme for mis-sold car finance with average payouts around £950 and first payments expected in early 2026.

Millions eligible for £950 mis-sold car finance refunds

The Financial Conduct Authority is preparing a redress scheme for drivers affected by mis-sold car finance. A Supreme Court ruling earlier this year narrowed the scope by limiting payouts for claims based on secret commissions, but the regulator says there could still be compensation for discretionary commission arrangements. The FCA estimates the average payout around £950 and notes that a substantial number of drivers could be affected by discretionary commission deals in deals signed between 2007 and 2021. Details are expected by October, with first payments likely to start in early 2026. Consumers are advised to file complaints with their finance providers now and to keep all paperwork, while avoiding third party firms that charge high fees.

To claim, individuals should check PCP or HP agreements and contact their finance provider. If a paper copy exists, gather the name, policy number, date of agreement, vehicle plate and current address. If no copy is available, request it from the lender or dealer. The regulator says firms should retain paperwork, which could help claims. The FCA is still undecided on whether the scheme will be opt-in or opt-out and on how much interest will be paid on refunds.

The plan tests how far regulators will go to repair perceived wrongs in a market where sales tactics have long looked opaque. The Supreme Court decision narrowed the potential payouts by ruling against claims tied to secret commissions, which tempers expectations and focuses attention on discretionary arrangements. The FCA’s timetable—details by October and payments starting in 2026—puts pressure on lenders to cooperate and on consumers to stay informed. If the process stays clear and timely, it could restore faith; if it bogs down in red tape, it risks leaving people waiting for years.

A broader theme here is accountability. This move could force lenders to rethink how they price risk and disclose costs. It also raises questions about how to balance swift redress with accurate calculations of who was truly affected. The outcome may set a standard for how future mis-selling cases are handled across sectors and influence public perceptions of both lenders and regulators.

Highlights

The next steps will reveal how quickly and fairly refunds reach affected drivers.