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Updated 14 April 2026

The FCA Motor Finance Redress Scheme: Further Assessment & Our Concerns

The FCA published its finalised Motor Finance Consumer Redress Scheme on 30 March 2026. This page explains what the scheme involves, where we believe it falls short, and what you need to do — and not do — while we assess its impact on your claim.

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No action is required from you at this stage unless your lender contacts you directly. We will be advising each client individually on the most suitable course of action once our review is complete.

A Recap: What the Scheme Offers

By way of brief recap, here are the scheme's key parameters as finalised by the FCA.

Agreements covered
12.1 million agreements, 6 April 2007 to 1 November 2024
Average payout
£830 per agreement (FCA estimate at 75% uptake)
Total compensation expected
£7.5 billion
How most are paid
The “hybrid remedy”: an average of commission paid and an estimated APR-based loss figure
APR adjustment used
17% for agreements from April 2014; 21% for 2007–2014 agreements
Compensatory interest
Bank of England base rate + 1% per year; minimum floor of 3%
Caps apply
In approximately 1 in 3 cases
Who decides your claim
Your lender, subject to Financial Ombudsman Service review

Eligibility: Who Is Covered

The scheme only applies where you were not clearly informed about one of the following three arrangements between your lender and the broker.

✓
A Discretionary Commission Arrangement
Allowed the broker to adjust the interest rate you paid in order to earn a higher commission.
✓
A High Commission Arrangement
Commission of at least 39% of the total cost of credit and 10% of the loan value.
✓
A Contractual Tie
An arrangement giving the lender exclusivity or first refusal over finance applications.
Important: some agreements are excluded entirely
•Agreements with very low commission (below £120 before April 2014, or £150 thereafter)
•Agreements where the interest rate was already in the lowest 5% of the market
•High-value loans — broadly, loans above approximately £82,000
•Certain tied arrangements where the manufacturer, lender and dealer were closely associated

Why the Scheme May Not Be Your Best Option

For a meaningful number of our clients, accepting the scheme offer without exploring alternatives first would be a mistake. Here's why, in plain terms.

The Formula Is Based on Averages, Not Your Case
A single formula is applied across 17 years of agreements, ignoring what commission was actually earned or your true financial loss. Two consumers with very different harm can receive similar compensation.
The Cap That Applies in Around 1 in 3 Cases
Where a cap applies, you receive less than the formula suggests you are owed — regardless of the strength of your case. Courts are not bound by any such cap.
Your Lender Determines Your Own Claim
The lender both assesses and decides your claim. The Financial Ombudsman can only check the rules were applied correctly — it cannot award more than the scheme allows.
The Scheme Is Narrower Than Originally Proposed
Coverage fell from 14.2 million to 12.1 million agreements, largely following lender and industry lobbying.
Designed Around Lender Operations, Not You
The FCA has been explicit that the scheme aims to give lenders certainty and support the future availability of motor finance — a compromise calibrated with industry health in mind.

Our Analysis: Specific Concerns With the Scheme's Design

These go beyond our general assessment above and reflect issues we consider legally and structurally significant.

Why Court Claims Remain a Serious Alternative

Litigation is not right for every client, and we say so plainly. But accepting the scheme offer is not automatically the safest or most financially sensible choice. Here's how courts compare.

Full Legal Discretion
Courts have broad power to make whatever order they consider just and equitable — not constrained by averaging formulas or caps.
Case-by-Case Assessment
A court looks at what actually happened: the commission, the arrangement, and the impact on you specifically.
Compensatory Interest at the Right Rate
Courts award interest genuinely designed to compensate, not a rate chosen for administrative convenience.
Higher Potential Awards
For strong cases with high commission and clear non-disclosure, a court award is likely to exceed the scheme formula.
No Lender-Controlled Process
The court is an independent decision-maker — the lender does not assess its own liability.
We are solicitors, not a claims management company. We are authorised to conduct litigation on your behalf, and we will not advise you to litigate unless we believe it is in your interests to do so.

Do Not Accept Any Offer Without Speaking to Us First

THERE ARE NO SECOND CHANCES — an accepted offer closes your claim for good.
Do not accept any offer, sign any documents, or click any acceptance links sent by your lender.
Do not respond to your lender confirming or rejecting their offer before speaking to us.
Contact us and send a copy of any correspondence received. We will review the offer and advise on the best course of action.

Your Cancellation Rights

You are under no obligation to continue instructing us — the decision to proceed is entirely yours. Before ending your agreement, please be aware of the following.

Contractual Obligations
We reserve the right to charge for professional work carried out on your behalf, in line with the agreement you signed at the outset of your claim.
Third-Party Representatives
If you instruct another firm or claims management company, they may also charge a cancellation fee — check their terms carefully.
Cost Transparency
Contact us with any questions about potential costs — we will explain the work completed to date before any invoice is raised.

Summary: Key Points to Remember

1
The scheme has significant limitations
It is designed for mass efficiency, not to maximise outcomes for individual consumers.
2
The formula uses averages, not your facts
Consumers with above-average harm are likely to receive less than they are truly owed.
3
Caps apply in around 1 in 3 cases
Artificially reducing awards even where wrongdoing is clear.
4
Your lender decides your claim
The Ombudsman can only check the rules were followed — not whether you deserved more.
5
We have identified four specific design concerns
The evidential basis for the APR formula, the narrow view of market integrity, reliance on the Johnson decision, and the flat interest rate.
6
Court claims remain a viable alternative
We will advise you individually on whether this is right for your case.

Contact Us

If you receive any correspondence from your lender or have questions about your claim, contact us immediately.

We are currently experiencing a high volume of enquiries — we aim to respond within 5 working days.

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.