31/3/26 Update: FCA motor finance redress scheme: final details announced
Regit Live Update (March 31, 2026): The Financial Conduct Authority (FCA) has just published its final rules for compensating millions of UK drivers affected by mis-sold car finance. Here's what you need to know in simple bullet points:
Key numbers updated
- £7.5 billion total redress (down from £8.2bn estimate)
- £9.1 billion total cost including admin (down from £11bn)
- 12.1 million eligible agreements (down from 14.2 million)
- April 6, 2007 - November 1, 2024 - full eligibility window
Timeline for payouts
- Payouts start 2026 - some as early as this year
- Most completed by end of 2027
- 3-month implementation for lenders (up to 5 months for older deals)
- Lenders contact you directly if eligible
What makes you eligible?
- Drivers qualify if they weren't told about at least one of these arrangements:
- Discretionary Commission Arrangements (DCAs) - dealers hiked your interest rate for bigger commissions
- High commission deals - 39%+ of total credit cost AND 10%+ of loan amount
- Contractual ties - lender had exclusivity with dealer (unless visible manufacturer links)
NOT eligible:
- Minimal commission (£120-£150 max)
- 0% APR deals
- Supercar loans (top 0.5% by value)
- Cases where no extra commission was earned
How much will you get?
- Two payout methods depending on your case:
- "Johnson case" high commission (90,000 drivers):
- Full commission + interest
Everyone else (hybrid remedy):
- Average of commission paid + estimated loss + interest
- Capped at lowest of: 90% commission, total credit cost, or market-adjusted cost
What FCA Chief Nikhil Rathi said:
"It's time now for lenders to put right that they've broken the law."
FCA expects firms to deliver redress quickly to avoid court delays costing £6bn extra.
Smart moves for drivers
- Keep your paperwork (2007-2024 agreements)
- Don't use claims firms - save 30% fees
- Wait for lender contact - free direct claims
- Bookmark this page - Regit updating hourly
This is one of the biggest consumer payouts in UK history. Millions overpaid for car finance through no fault of their own - now redress is coming.
Millions of UK drivers who financed a car between 2007 and 2024 may soon receive compensation, with average payouts of around £700. The Financial Conduct Authority (FCA) is expected to confirm its £8bn car finance redress scheme later today (Monday, March 30), following a major investigation into mis-sold car finance involving hidden commissions. Most payouts are expected to begin from 2026.
FCA to confirm £8bn car finance compensation scheme
Millions of drivers will receive a major update today in the ongoing car finance mis-selling scandal as the Financial Conduct Authority (FCA) prepares to confirm its next steps on compensation after markets close this evening (Monday, March 30).
The announcement follows months of consultation into how a nationwide car finance redress scheme should work, covering cases where drivers were unknowingly charged higher interest rates so lenders and dealers could benefit from larger commissions.
Regit will continue updating this article throughout the day as new details are released from the FCA.
Key Facts
- £8.2bn: Estimated total value of the FCA’s compensation fund.
- £11bn: Total projected cost to firms once admin and operational expenses are included.
- 2007–2024: Period during which finance agreements must have been active to qualify.
- £700: Average compensation amount estimated per finance agreement.
- 14 million: Approximate number of motor finance deals potentially affected.
- 2026: The year when most drivers are likely to start receiving payouts.
- 85% participation: Baseline estimate used by the FCA to calculate total payouts.
Why are drivers owed compensation?
At the centre of the scandal are Discretionary Commission Arrangements (DCAs), which allowed car dealers and brokers to set customer interest rates. The higher they made the rate, the more commission they earned, often without the driver’s knowledge.
This practice, banned by the FCA in January 2021, created huge conflicts of interest and left many drivers paying significantly more than they should have for their finance deals. The forthcoming FCA redress scheme aims to reimburse those overcharged.
How big could the payout be?
The FCA estimates that if 85% of eligible customers take part, compensation payouts could total £8.2bn, but that figure could climb to £9.7bn if every affected driver claims. Including administrative costs, the total bill for the industry could exceed £11bn.
Big lenders, including Lloyds Banking Group, have already set aside billions in preparation for car finance compensation claims.
According to Nicola Pangbourne, a partner at Kennedys, financial institutions should “assume" that a compensation scheme will be in place, adding that many have already started preparing – collecting customer data and hiring staff to manage claims efficiently.
FCA warns drivers: Avoid paying claims companies
The FCA has also revealed that 41% of drivers aware of possible compensation didn’t know they could claim directly for free, without using a claims management company (CMC) or law firm.
To prevent drivers from being misled, the FCA has launched a joint taskforce with the Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO) and Advertising Standards Authority (ASA).
This group will share intelligence to crack down on poor handling of motor finance claims and protect consumers from firms charging excessive fees. Drivers who go through a CMC or law firm risk losing up to 30% of their compensation, or even more if the case goes to court.
Dan Jones, Executive Director of Transformation and SRA taskforce lead, said the initiative will help customers maintain confidence in the redress system and is a strong example of regulators working together to protect motorists.
Alison Walters, Director of Consumer Finance and FCA taskforce lead, reaffirmed: "Our scheme will be free and people don’t need to use a CMC or law firm.
"Should they decide to so, it's important that they can trust CMCs and law firms to act in their best interests.
"This taskforce will ensure we deal with problems quickly and act decisively."
What happens next?
Regit will update this article throughout the day as the FCA releases new details from today’s announcement.
The FCA is expected to finalise the car finance redress scheme rules in late March 2026, giving lenders a 3-month implementation period for most agreements (or up to 5 months for older deals) to build their systems and contact customers directly.
This streamlined timeline means millions could receive car finance compensation as early as 2026, with firms required to notify eligible drivers of what they’re owed within three months of the scheme launch.
For now, gather any car finance paperwork from 2007 to 2024, especially agreement numbers and lender details, to make claiming straightforward when the process opens.