The Financial Conduct Authority (FCA) has announced the introduction of a Motor Finance Redress Scheme, which could result in compensation for millions of consumers who entered into motor finance agreements.

What is the Redress Scheme?

The scheme is designed to address concerns around the way some motor finance agreements were arranged. Where issues are identified and claims are upheld, consumers may be entitled to compensation.

How much compensation could be paid?

The FCA has indicated that average payouts may be around £829 per agreement, although this will vary depending on individual circumstances.

It is important to note that many consumers have had more than one vehicle on finance since 2007, meaning total compensation could be higher where multiple agreements are involved.

What should consumers do?

The FCA has encouraged consumers to submit claims as soon as possible. While there is time to act, early submission may help avoid delays as demand increases.

The current pause on complaint handling deadlines will be lifted on 31 May 2026, meaning firms will resume responding to complaints from this date.

Key deadline to be aware of

The Redress Scheme will remain open until 31 August 2027. After this date, claims may no longer be accepted, so it is important for consumers to be aware of the deadline.

Where to find more information

Consumers can find full details of the scheme, including eligibility criteria and how to submit a claim, by visiting the FCA’s official announcement.