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PS26/3 is the FCA’s industry-wide motor finance redress scheme, backed by new DISP complaint-handling rules, but key parts are currently paused by an Upper Tribunal order. If you had a car finance agreement between 2007 and 2024, check your dates now and look out for scheme communications or consider a free eligibility check while the legal process plays out.
TL;DR:
- Agreements dated April 6, 2007, through November 1, 2024, may qualify if a dealer arranged regulated PCP or hire purchase finance and received lender commission.
- High commission means at least 39% of credit costs or 10% of the loan; clear, prominent commission disclosure and zero APR deals are generally excluded.
- The Tribunal’s July 2, 2026, order pauses required calculations, payments, and compensation letters, but firms must identify eligible complaints and preserve records through April 11, 2031.
- The FCA estimates average redress at £829 per agreement, but the hybrid remedy uses the lowest of three caps and varies with each loan.
- Keep your paperwork and complain to the lender unless the scheme handles your case; refer an unresolved complaint to the Financial Ombudsman Service within six months.
The Financial Conduct Authority used its statutory powers under section 404 of the Financial Services and Markets Act to set up an industry-wide redress scheme rather than leave millions of individual complaints to be assessed case by case. That approach gives lenders a consistent set of rules to apply and gives consumers a route to redress without having to fight each claim through the Financial Ombudsman Service individually.
The scheme splits into two periods, reflecting how commission disclosure rules changed over time:
Within both periods, the FCA built the scheme around three core tests for unfairness: undisclosed discretionary commission arrangements, where the dealer could adjust the interest rate and therefore their own commission; high commission arrangements, where the commission paid to the dealer was disproportionate to the loan; and contractual ties between lender and dealer that limited genuine competition. A small number of agreements fall outside these tests through specific exceptions set out in the policy statement.
Working out whether your own agreement is likely to qualify starts with the dates and the type of deal you had.
If your loan was excluded for a high-value or disclosure reason, that does not close the door entirely. The Ombudsman and the courts remain available for matters the scheme itself does not cover.
Most agreements under the scheme will be assessed using what the FCA calls a hybrid remedy, rather than a straight commission repayment. That lowest-of-three structure is deliberate. It is designed to compensate consumers for the extra cost caused by unfair commission arrangements without over-paying relative to what the consumer would have paid on a fairer deal.
Interest on redress is calculated at the Bank of England base rate plus 1%, with a 3% minimum, applied from the date the consumer made payments under the agreement.
The FCA estimates the scheme would return £7.5 billion to consumers at 75% uptake, across roughly 12.1 million eligible agreements, with average redress of around £829 per agreement. That average hides real variation: a short, low-value agreement with modest commission will see a fraction of that, while a long PCP deal with a high discretionary commission markup could see considerably more.
Alongside the redress scheme, the FCA changed its DISP complaint-handling rules to extend the time firms have to investigate motor finance complaints during the pause period and to set clearer record-keeping duties.
While that suspension is in place, firms do not have to calculate or pay redress, or send scheme compensation letters. They must still identify in-scope complaints, gather and preserve evidence, and tell some complainants where no compensation is due, so the groundwork continues even though payments are on hold.
Waiting for a letter is one option. Acting now puts you ahead of the queue once the legal position settles.
Pro Tip: Keep copies of everything you send and receive during a complaint, since missing paperwork is one of the most common reasons redress calculations get delayed.
Our site finds your car finance agreements for free in under 60 seconds, so you do not need to dig through old paperwork or contact the lender yourself before finding out whether you are likely eligible.
The FCA’s intervention did not come from a single bad practice but from a pattern that recurred across the motor finance market for years. The most significant was the discretionary commission arrangement, where a dealer arranging your finance could set or adjust the interest rate within a range set by the lender, and earn more commission the higher the rate they chose. You had no visibility of this and no reason to question the rate you were offered, since it looked like a standard quote rather than one inflated to boost the dealer’s earnings.
A second pattern involved commission levels disproportionate to the size and length of the loan, where the dealer’s cut bore little relation to the work involved in arranging the finance. A third involved contractual ties between a dealer and a single lender, or a small panel of lenders, that reduced the chance you were shown competitive rates from the wider market.
What connects all three is a lack of disclosure. In most cases, consumers were never told that commission was payable, let alone how it was calculated or how it related to the interest rate they were charged. That absence of transparency, rather than the existence of commission itself, is what the FCA’s rules under PRIN and the Consumer Duty are aimed at correcting, since firms are expected to treat customers fairly and deliver good outcomes, not just avoid breaking specific disclosure rules.
Claims that succeed under the scheme share a few common features. They involve an agreement within the 2007 to 2024 window, a clear commission arrangement between dealer and lender, and little or no evidence that the commission structure was disclosed to the consumer at the point of sale.
A typical successful case involves a PCP agreement where the finance paperwork shows a commission payment to the dealer but no accompanying explanation of how that commission was calculated or how it might have affected the interest rate offered. Once a complaint or scheme assessment confirms the commission arrangement falls within the DCA or high commission tests, the redress calculation applies the lowest of the three caps described earlier, plus interest from the date payments began.
The agreements least likely to succeed are ones with clear, prominent disclosure at the point of sale, very low commission relative to the loan, or agreements that fall outside the 2007 to 2024 window entirely. The strength of a claim depends heavily on what the original paperwork shows, which is why preserving documents, rather than assuming the lender will produce them later, consistently makes the difference between a straightforward assessment and a drawn-out dispute.
Once you raise a complaint, or a claims management service refers your case to a solicitor, the process generally follows a similar pattern regardless of which lender is involved. The firm handling your case requests your agreement details from the lender, checks the dates and commission structure against the scheme’s eligibility tests, and builds a file showing whether your case meets the DCA, high commission or contractual tie criteria.
From there, the lender has set timeframes to respond, extended under the current DISP rules while the Tribunal suspension is in place. If your case is accepted, redress is calculated using the hybrid remedy and the applicable cap, then paid directly or applied to your remaining finance balance, depending on the agreement’s status.
You should expect to provide basic identifying information, such as your name, address and the dealer or finance company involved, but you are not generally required to track down the original paperwork yourself. A solicitor or claims handler working on your behalf will usually request the agreement details directly from the lender, which is particularly useful given how many people no longer have records from agreements taken out a decade or more ago.
Submitting a complaint is only the starting point. Under the FCA’s rules, you have a right to a substantive response within the timeframes set by DISP, and firms are required to investigate properly rather than issue a generic rejection.
If you disagree with a lender’s decision, or if you do not hear back within the required timeframe, you have the right to escalate your case to the Financial Ombudsman Service free of charge. The Ombudsman can independently review the lender’s decision and has the power to order redress where it finds the original complaint response was wrong. These rights exist alongside, not instead of, the FCA’s broader Consumer Duty, which requires firms to act to deliver good outcomes for retail customers throughout the life of the agreement, not only when a complaint is raised.
The FCA is trying to balance fairness to consumers against the risk of destabilising a lending market that millions rely on for everyday car purchases, and the two-scheme structure with capped redress reflects that balancing act.
Acting now, even while the Tribunal process continues, protects you either way: if the scheme proceeds largely as planned, your records are ready; if it changes, you have already started a complaint that stands on its own.
— Jake
We built our free agreement finder around the one thing that stops most people from starting a claim: not knowing where their old paperwork went. Our site finds your car finance agreements for free in under 60 seconds, so you get a clear answer on your likely eligibility before you commit to anything.
If your check comes back positive, we refer your case to a partner law firm, and the claims process runs without you needing to supply vehicle registration details or dig out lender paperwork yourself. Start your free eligibility check to see where your agreement stands.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
Yes, financial advisors operating in the UK must be authorised and regulated by the Financial Conduct Authority, which sets conduct standards they must meet when advising on products including credit and insurance. This is separate from the motor finance redress scheme, which applies to lenders and dealers rather than independent financial advisors.
The FCA’s Principles for Businesses, set out in the PRIN handbook, are a set of fundamental obligations firms must meet, including treating customers fairly and paying due regard to their interests. The Consumer Duty, added as Principle 12, requires firms to deliver good outcomes for retail customers, and it underpins the FCA’s expectations for how lenders handle motor finance complaints.
FCA stands for the Financial Conduct Authority, the UK regulator responsible for overseeing financial services firms, including banks, lenders and motor finance providers. It sets conduct rules, handles enforcement, and in 2026 introduced the PS26/3 motor finance redress scheme in response to widespread unfair commission practices.
A discretionary commission arrangement, or DCA, is a deal between a car dealer and a lender that let the dealer set or adjust the interest rate on your finance agreement within a range, earning more commission the higher the rate chosen. These arrangements were rarely disclosed to consumers and are one of the three core tests used to decide whether an agreement qualifies for redress under the FCA’s scheme.
Not fully. The Upper Tribunal partially suspended parts of the scheme following a legal challenge, so firms are not currently required to calculate or pay redress, though they must still preserve records and identify eligible complaints while the legal process continues.