FCA: Motor finance compensation scheme consultation progress and timing - statement

We've moved at pace since the Supreme Court judgment in August 2025, which, along with a previous High Court judgment, confirmed that motor finance lenders have liabilities to their customers. 

On 7 October 2025, we began consulting on an industry-wide compensation scheme as the most efficient way to address the liabilities for those motor finance customers treated unfairly between 2007 and 2024, and to provide certainty for all affected.

We've been undertaking extensive engagement with consumer groups, lenders, investors, motor manufacturers, trade bodies and professional representatives. We're grateful for the feedback already received and the speed with which many parties are working to engage constructively with us.  

As well as feedback on the methodology for calculating redress, issues raised so far include the time period for the scheme; the rate of compensatory interest; how independent mechanisms will ensure confidence (including the role of the Financial Ombudsman Service and ideas for alternative approaches); how smaller firms or those with a low number of agreements eligible for redress can operate the scheme in a cost-effective way; how to prevent fraud; and what the relationship between motor manufacturers and their captive lenders means for commercial ties, particularly in relation to lending for the purchase of new cars.

It's important we receive as much evidence as possible on specific concerns through the consultation as well as alternative suggestions if respondents don't agree with our proposals. We'll consider all the evidence and ideas received before taking final decisions. 

We've been transparent throughout. For example, 11 lenders, which were part of our investigation into the historic use of discretionary commission arrangements have had data since 16 August 2024 that showed their disclosure rates.

At the same time, we've heard feedback - from lenders and some consumer and dealer representatives - that analysis of the extensive market wide data will take time, as will ensuring everything is in place so any scheme runs smoothly.  

We're therefore extending the consultation deadline until 5pm on 12 December. We continue to welcome and encourage responses before then, including on those consultation questions that may take respondents less time to answer.

In parallel, we'll continue our extensive engagement with a wide range of stakeholders, including once the consultation has closed.  

We still expect to publish final rules in early 2026. That will now be either February or March. 

Some complaints have been paused since January 2024. We have been consulting on extending this pause beyond 4 December. That consultation is now closed and we're considering responses.  

We are clear, however, that complaints cannot be paused indefinitely. It is therefore important, in particular for lenders, to maintain the pace so we can draw a line under this issue and bring certainty to their customers, the market and investors. This will ensure a trusted motor finance sector can continue to serve millions of families every year.  

Further information

1. Our consultation on motor finance redress scheme.
2. Information for consumers on motor finance.
3. Information for firms on motor finance complaints.