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Updated 1 August 2026

The FCA Motor Finance Redress Scheme: A Closer Look, and Where We Have Concerns

On 30 March 2026, the FCA confirmed the final version of its Motor Finance Consumer Redress Scheme. Below, we set out how the scheme works, the areas where we think it falls short, and the dos and don'ts for you while we work out what it means for your claim.

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At this point, there's nothing you need to do unless you hear directly from your lender. Once we've completed our review, we'll advise each client individually on the best next step for their case.

A Quick Recap: What's on the Table

Here's a short reminder of the scheme's headline terms, as set out by the FCA.

Agreements in scope
12.1 million agreements taken out between 6 April 2007 and 1 November 2024
Typical payout
£830 per agreement, the FCA's estimate assuming a 75% uptake
Expected total redress
£7.5 billion
How payments are calculated
Via the “hybrid remedy” — combining actual commission paid with an estimated APR-based loss figure
APR figure applied
17% for agreements from April 2014 onward; 21% for 2007–2014 agreements
Interest on redress
Bank of England base rate plus 1% annually, with a 3% minimum
Where caps apply
Roughly one in three cases
Who assesses your case
Your own lender, with the Financial Ombudsman Service able to review the decision

Who Qualifies for the Scheme

You'll only be covered if you weren't properly told about one of these three arrangements between your broker and lender.

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Discretionary Commission Arrangements
Let the broker increase the interest rate you were charged so they'd earn more commission.
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High Commission Arrangements
Where commission reached at least 39% of the total cost of credit and 10% of the loan amount.
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Contractual Ties
Deals that gave the lender exclusive rights or first refusal on finance applications.
Please note: certain agreements don't qualify at all
•Agreements where commission was very low — under £120 before April 2014, or £150 after
•Agreements that already carried one of the lowest 5% of market interest rates
•Larger loans — generally those above roughly £82,000
•Some tied arrangements involving closely linked manufacturers, lenders and dealers

Why Accepting the Scheme Outright May Not Serve You Best

For plenty of our clients, taking the scheme's offer without looking at other options first could be the wrong call. Here's our reasoning, in plain terms.

It Relies on Averages, Not Your Individual Circumstances
The same formula is used across 17 years' worth of agreements, regardless of the commission actually earned or the real loss you suffered. Two people with very different levels of harm could end up with near-identical payouts.
Caps Can Reduce What You're Owed in Around 1 in 3 Cases
Where a cap applies, you receive less than the formula calculates you're owed — no matter how strong your case is. A court wouldn't be limited in this way.
Your Lender Marks Its Own Homework
It's your lender who both assesses and rules on your claim. The Ombudsman's role is limited to confirming the rules were followed correctly — it can't grant you more than the scheme permits.
Coverage Has Already Been Scaled Back
The number of agreements covered dropped from 14.2 million to 12.1 million, largely as a result of pressure from lenders and the wider industry.
Built With Lenders' Interests in Mind
The FCA has openly said the scheme is meant to give lenders certainty and keep motor finance available going forward — a balance struck with the industry's health as a priority.

Our Analysis: Specific Concerns With How the Scheme Is Designed

These sit alongside our general assessment above and reflect issues we consider legally and structurally significant.

A Formula Without Enough Evidence Behind It
The FCA calculates consumer loss using flat APR reductions of 17% or 21%, treating that gap as the overpayment. We're not convinced these figures rest on a strong enough evidence base — they're broad market averages, not a reflection of what any individual actually paid. Even the FCA has conceded that 17% likely understates the loss on agreements from before April 2014, yet it settled on 21% as an informed estimate rather than something backed by hard data. The same approach is then applied to non-discretionary commission cases too, purely to keep the process administratively simple.

Why Litigation Is Still a Genuine Alternative

We won't pretend litigation suits every client — it doesn't. But that doesn't mean taking the scheme's offer is automatically the safer or more financially sensible choice. Here's how the two compare.

Genuine Judicial Discretion
A court can make whatever order it considers fair and equitable, without being tied to averaging formulas or caps.
Judged on Your Own Facts
The court examines what genuinely happened in your case — the commission paid, the arrangement in place, and how it affected you specifically.
Interest That Reflects Real Loss
Interest awarded by a court is meant to properly compensate you, rather than being set at a rate chosen for administrative convenience.
Potential for a Larger Award
Where commission was high and non-disclosure is clear, a court award is likely to exceed what the scheme's formula would give you.
An Independent Decision-Maker
Unlike the scheme, the court isn't the lender marking its own liability — it's a neutral third party.
We're a firm of solicitors, not a claims management company, and we're authorised to conduct litigation on your behalf. We'll only advise you to litigate where we genuinely believe it's in your interests to do so.

Speak to Us Before You Accept Anything

THIS DECISION CAN'T BE UNDONE — once you accept an offer, your claim is closed for good.
Don't accept any offer, sign any documents, or click acceptance links your lender sends you.
Hold off replying to your lender — whether accepting or declining — until you've spoken to us.
Get in touch and forward us a copy of anything you've received. We'll review the offer and advise on the best course of action.

Your Right to Cancel

You're free to stop instructing us at any point — that choice is entirely yours. Just bear the following in mind before you end your agreement.

What You Agreed To
We're entitled to charge for the professional work already carried out on your behalf, in line with the agreement you signed when your claim began.
If You Switch Providers
Another firm or claims management company you instruct instead may also apply a cancellation fee — it's worth checking their terms closely.
Clarity on Costs
Ask us about any potential charges — we'll talk you through the work completed so far before any invoice is raised.

In Short: What to Take Away

1
The scheme has real shortcomings
It's built for processing claims at scale, not for maximising the outcome for any individual consumer.
2
It's driven by averages, not your specific case
If your loss was above average, you're likely to be paid less than you're actually owed.
3
About a third of cases are capped
Which can shrink an award even where the wrongdoing is clear.
4
Your own lender rules on your claim
The Ombudsman can only confirm the process was followed — not whether you deserved more.
5
We've flagged four specific design concerns
The evidence behind the APR formula, a narrow reading of market integrity, over-reliance on the Johnson decision, and a flat interest rate.
6
Litigation is still a real option
We'll assess your case individually and advise whether it's the right route for you.

Get in Touch

Heard from your lender, or have a question about your claim? Reach out to us straight away.

We're currently dealing with a high volume of enquiries — please allow up to 5 working days for a response.

info@getrefunded.co.uk
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Completing an assessment does not guarantee compensation — you may also raise a complaint directly with your lender or the Financial Ombudsman Service free of charge. No win, no fee — we don't receive anything unless your claim is successful. Our fees depend on the redress secured, with full details provided in your agreement before you proceed. A cancellation fee may apply if you withdraw your claim more than 14 days after signing up.