The FCA's investigation into motor finance mis-selling has moved through several significant stages since it launched in early 2024. Here is a plain-English update on where things stand in 2026, what has happened so far, and what it means if you had PCP or HP car finance between 2007 and 2024.

The Beginning: FCA Review Launched in January 2024

In January 2024, the Financial Conduct Authority announced it was reviewing historical motor finance commission arrangements. The FCA had found evidence that millions of consumers had paid more for their car finance than they should have, due to a practice called discretionary commission arrangements (DCAs).

Under DCAs, car dealers could set — and often inflate — the interest rate on a customer's finance agreement. The higher the rate, the more commission the dealer earned. This conflict of interest was almost never disclosed to consumers, meaning buyers had no idea they were being charged more than necessary.

The FCA's review was one of the most significant regulatory interventions in UK consumer finance for years. It announced that it would investigate the scale of the problem and consider whether a formal redress scheme was needed.

The FCA Paused Complaint Handling

When the review began, the FCA also paused the normal complaint handling timescales for motor finance DCA complaints. This was to prevent lenders from being inundated with ad hoc complaints while the broader review was ongoing, and to ensure that any eventual redress scheme would treat all affected consumers consistently.

This pause affected both direct lender complaints and FOS referrals for a period. It was subsequently extended as the investigation progressed.

The October 2024 Court of Appeal Ruling

A major development came in October 2024, when the Court of Appeal ruled in three joined cases that secret commissions on motor finance were unlawful. The Court found that dealers had breached their duty as credit brokers by accepting commissions that were not properly disclosed to consumers, and that lenders were liable as a result.

This ruling significantly widened the potential scope of compensation beyond just DCA arrangements — it suggested that any undisclosed commission, not just discretionary ones, could form the basis of a valid claim. The financial exposure for lenders was revised sharply upwards following the judgment.

The Supreme Court Hearing: April 2025

Given the potential scale of liability — some estimates put the total redress at £30 billion or more — several major lenders appealed the Court of Appeal ruling to the Supreme Court. The Supreme Court heard the case in April 2025.

The Supreme Court's judgment is expected to settle the key legal questions: what level of disclosure was required, whether consumers can claim for non-DCA commissions, and whether lenders can be held liable for broker behaviour they may not have directly controlled.

FCA Consultation on Redress Scheme: Late 2025

In the second half of 2025, the FCA launched a consultation on the mechanics of a potential industry-wide motor finance redress scheme. Key elements of the proposed scheme included:

• Automatic or simplified redress: Rather than requiring every consumer to lodge a separate complaint, the scheme aims to identify eligible consumers and pay them compensation with minimal friction.
• Average compensation of around £829 per agreement: The FCA's modelling and redress scheme materials refer to average compensation per eligible agreement of approximately £829, with an indicative total of around £1,658 where a consumer has two agreements. Individual amounts will vary significantly based on the size and terms of each agreement.
• Extended to all commission types (subject to Supreme Court ruling): Depending on the Supreme Court's decision, the scheme may cover both DCA commissions and other undisclosed commission arrangements.

The consultation period closed in late 2025, and the FCA was expected to publish its final rules in early-to-mid 2026.

Where Things Stand in April 2026

As of April 2026:

• The FCA redress scheme (PS26/3) is confirmed and live. The FCA formally announced the £7.5bn motor finance consumer redress scheme in March/April 2026. Millions of UK motorists are expected to receive payouts this year.
• Two scheme windows apply: Scheme 1 covers agreements from 6 April 2007 to 31 March 2014 (implementation deadline: 31 August 2026). Scheme 2 covers agreements from 1 April 2014 to 1 November 2024 (implementation deadline: 30 June 2026).
• Deadlines matter. Consumers who submit complaints before the end of the relevant implementation period are expected to receive compensation sooner.
• A legal challenge has been filed by consumer group Consumer Voice, arguing the compensation calculations undervalue claims. The FCA has said it is considering its approach and will update consumers. Experts including Martin Lewis continue to advise consumers to submit complaints now regardless of the challenge.

What Should Consumers Do?

If you had PCP or HP car finance with a dealership-connected lender between 2007 and 2024, here is our advice:

1. Check your eligibility now. Even if the formal redress scheme is not yet open, submitting your details now means you are prepared and in the queue when it does open.

2. Gather any records you have. Finance agreements, account statements, or anything showing the name of the lender and the dates of the agreement are helpful. If you don't have them, your lender is required to provide them.

3. Do not assume you are not eligible. The practice was so widespread that even people who believe they had a straightforward finance deal may have been affected without knowing it.

4. Understand your options. You can claim directly with your lender for free, use the FOS, or use a service like The PCP Team — we assess your eligibility and refer your case to a specialist law firm on our panel who manages the process on your behalf.

What The PCP Team Is Doing

The FCA redress scheme (PS26/3) is now confirmed and live. We are actively assessing new enquiries and referring eligible cases to specialist law firms on our panel, who are ready to pursue claims through the scheme. If you have already submitted your details, the law firm handling your case will be in contact as your claim progresses.

If you have not yet checked your eligibility, our online form takes less than two minutes. No win, no fee — a success fee applies only if compensation is recovered. See our Fees page.

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The PCP Team is a trading style of Credit Claim Assist Ltd, authorised and regulated by the Financial Conduct Authority for claims management activity (FRN 832480). This article is for informational purposes only and does not constitute legal or financial advice.