Car finance commission refunds: what the FCA redress scheme means for you

If you took out car finance between 6 April 2007 and 1 November 2024, and the dealer earned commission that was not properly disclosed, you may be covered by the FCA's motor finance redress scheme. Parts of the scheme are currently suspended by legal challenges, but complaining to your lender is still free, still possible, and still worth doing.

This is one of the largest consumer redress exercises in UK history, and also one of the most confusing to follow, because the position keeps moving. Here is where things stand, who is likely to be in scope, and what is actually worth doing now.

Key takeaways

• The scheme covers motor finance agreements from 6 April 2007 to 1 November 2024 involving undisclosed discretionary commission arrangements (DCAs) or certain high-commission deals.
• The FCA estimates roughly 12.1 million agreements could be eligible, with average redress of around £830 per agreement.
• On 2 July 2026 the Upper Tribunal suspended parts of the scheme while lender legal challenges are heard - payouts are on hold, but complaints are not.
• You do not need a claims company: complaining to your lender is free, and the FCA has warned that claims firms may take over 30% of any payout.
• If your lender rejects a complaint or mishandles it, the Financial Ombudsman Service is free and independent.

What is this all about?

For years, many car dealers arranging finance were paid commission by lenders in ways customers were never clearly told about. Two arrangements matter most:

Arrangement	What it means	Why it is treated as unfair
Discretionary commission (DCA)	The dealer could adjust your interest rate to increase its own commission	You paid more interest without being told the dealer had a direct incentive to charge you more. Under the scheme, loss is presumed.
High undisclosed commission	Commission was at least 39% of the total cost of credit and 10% of the loan amount, without adequate disclosure	Commission that large, hidden from the customer, is presumed to have made the relationship unfair.

DCAs were banned by the FCA in January 2021, so agreements before then are the main focus.

Where the scheme stands right now

The FCA confirmed the scheme in March 2026 (policy statement PS26/3) and intended compensation to start flowing in 2026. Several lenders then brought legal challenges. On 2 July 2026 the Upper Tribunal suspended parts of the scheme on agreed terms while those challenges are resolved: lenders do not currently have to calculate or pay scheme compensation. The Tribunal will hear the challenges on 14-18 December 2026 or 16-26 February 2027, and if the scheme survives, the FCA expects payments to begin in 2027.

The partial suspension also created something genuinely useful: firms must now tell many complainants who are not owed compensation by fixed dates, so you are not left guessing indefinitely:

Your agreement started	What triggers the deadline	You should hear by
On or after 1 April 2014	You complained by 30 June 2026	18 November 2026
Before 1 April 2014	You complain by 31 August 2026	18 January 2027
Either	Any later complaint	Within 5 months of complaining

The practical takeaway: if you have an older, pre-April 2014 agreement, complaining before 31 August 2026 means you either get a definitive answer by mid-January 2027 or stay in the queue for compensation - rather than waiting at the back indefinitely.

What has not changed:

• You can still complain to your lender, for free, and complaints are logged rather than ignored.
• People who have already complained are expected to be dealt with sooner when the scheme operates.
• Under the scheme design, lenders must contact eligible customers who have not complained if they are likely to be owed money - you are not required to apply through anyone.

Sources: FCA motor finance redress scheme announcement, the FCA policy statement PS26/3, and the FCA's statement on the partial suspension of the scheme (2 July 2026). Position last checked: 05.07.2026 - this area is moving, so check the FCA's pages for the current status.

Are you likely to be in scope?

You are more likely to be covered if:

• the finance was taken between 6 April 2007 and 1 November 2024 - PCP and hire purchase are the classic cases
• the finance was arranged through a dealer or broker, not directly with a bank
• the agreement involved a DCA, or unusually high commission that was not clearly disclosed
• the vehicle was for personal use

You will often not know what commission arrangement applied - that is normal, and it is exactly what you can ask the lender. Leased vehicles and agreements after November 2024 are generally outside this scheme.

What is worth doing now (all free)

1. Dig out the agreement details. Lender, dealer, approximate dates, vehicle. If you have lost the paperwork, your credit report and old bank statements help identify the lender.
2. Write to the lender. Say you believe your agreement may have involved a discretionary commission arrangement or undisclosed high commission, and ask it to confirm what commission arrangement applied and to treat your letter as a complaint if so.
3. Keep the acknowledgement. Being in the lender's complaint queue matters: existing complainants are prioritised when the scheme operates.
4. Ignore cold calls and "deadline" marketing. The FCA has warned that claims firms may take over 30% of compensation for filling in a form you can send yourself. No claims company can get you more than the scheme or the Ombudsman would award. If you already signed up with one and want out, cancellation fees must be reasonable and reflect work actually done - the FCA even publishes a template letter for complaining about poor claims-company practices.
5. Watch for contact from your lender. Under the scheme, lenders must write to eligible customers. Make sure your address and email with the lender are current.

What outcome can you expect?

Under the scheme's methodology, redress is broadly designed to compensate for the overpaid interest attributable to the unfair commission arrangement, with interest on top. The FCA's estimated average of around £830 per agreement hides a wide range - larger loans, longer terms and higher rate mark-ups mean more. Treat any figure you see in advertising as marketing, not a promise.

If you had multiple agreements over the years, each one counts separately.

When the Financial Ombudsman fits in

The scheme, once operating, is meant to handle most cases without you doing anything beyond confirming details. But the Ombudsman route still matters if:

• your lender rejects your complaint and you disagree
• your agreement falls outside the scheme's scope but you still think the commission arrangement was unfair
• the lender delays beyond what the rules allow

The Financial Ombudsman Service is free, independent, and you keep any compensation it awards. The usual six-month window from a final response applies - though special rules extend some motor-finance deadlines while the scheme is set up, check the current time limits rather than assuming.

For context, our analysis of published Ombudsman decisions shows how Ombudsman complaint outcomes vary by sector, which is useful background while the motor-finance scheme remains in flux.

If your complaint is about the affordability of the finance rather than commission - the payments were simply more than you could sustain - that is a different complaint: see how to complain about unaffordable lending.

How HeyRefund can help

The car finance saga has spawned a lot of noise and a lot of expensive middlemen. The facts you actually need are simple: which agreements you had, with whom, when, and what you have asked the lender to confirm. HeyRefund helps you organise those details and prepare a clear, dated complaint you can send yourself - and keep 100% of anything that comes back.

You can do all of this for free. HeyRefund just makes it quicker and keeps the file tidy while the legal position develops.