The Financial Conduct Authority (FCA) is redoubling its efforts to gain international support for its plans for a car finance redress scheme. The regulator’s chief executive jetted to Detroit this week in a surprise visit to meet with high-ranking automotive and finance executives [1], as the FCA works hard to assuage lenders and manufacturers that the scheme is both fair and robustly constructed. It is a vital step in the regulator’s drive to rebuild confidence following years of investigation into the car finance claims scandal.

The redress scheme, which could result in millions of motorists getting compensation for unfair commission practices, has been criticised by some lenders [2]. They said the size and retrospective nature of the scheme could have far-reaching consequences for the whole car finance industry. But the FCA has said that strong action was needed to restore consumer confidence and ensure a consistent approach to redress for mis-sold agreements.

Why the FCA’s Detroit Mission Matters

Detroit, the heart of the global automotive industry, is a fitting backdrop for the FCA’s latest push to win support from international manufacturers. Many UK lenders operate in partnership with global car brands headquartered there, meaning their buy-in will be essential for implementing the compensation scheme smoothly.

According to industry observers, the FCA’s leadership is keen to ensure that international partners understand the reasoning behind the redress model and how it will apply across different lending arrangements. The initiative stems from findings that many consumers paid inflated interest rates under fixed commission agreements, where brokers earned more by setting higher rates for borrowers.

This practice, now widely viewed as a cornerstone of the car finance scandal, led to years of overcharging that the FCA estimates could total billions in compensation. The regulator has emphasised that collaboration with manufacturers and lenders is vital to avoid disruption and ensure that eligible customers receive the refunds they deserve.

Industry sources say that banks and finance firms have privately expressed concern about the operational challenges of identifying and compensating millions of customers. Still, many analysts believe that global cooperation could help speed up the process, a priority given the scale of claims expected in 2026.

Inside the FCA Consultation: What Drivers Should Know

The FCA formally opened its consultation on 7 October 2025 [3], outlining how its proposed redress scheme would work. It covers motor finance agreements taken out between 6 April 2007 and 1 November 2024, a span of more than 17 years. During this time, millions of UK drivers unknowingly entered agreements that included hidden commissions, pushing their total repayments higher.

Under the proposal, affected motorists could receive around £700 per agreement on average [4], depending on their loan terms. The FCA expects to pay compensation to millions of mis-sold car finance customers next year, making it one of the largest consumer redress programmes since the PPI scandal.

The plan from the regulator also shines a light on the various routes consumers can take if they are looking to pursue redress. From taking complaints directly to your lender, to submitting a case to the Financial Ombudsman Service, or waiting for the official scheme to get underway, all of the options available are free to consumers. If you are one of those consumers who want to keep on top of the situation, the latest news is that car finance claims in the UK may be looking at a start date in early 2026, after it is given the final go-ahead.

As the FCA continues to gather feedback from lenders, trade groups, and consumer organisations, it has made clear that its goal is to create a fair, efficient, and standardised process. By doing so, the regulator hopes to prevent inconsistent decisions and avoid the backlog that plagued earlier financial redress programmes.

For now, consumers are encouraged to prepare early. Those asking how long does a PCP claim take or when is the PCP payout should note that timelines will vary by lender, but the FCA expects most cases to be reviewed within months of the scheme’s start date.

What Should You Do Now?

The FCA has now proposed an industry-wide compensation scheme for unfair car finance agreements between April 2007 and November 2024, with average payouts expected to be around £700 per agreement. You can still choose to complain directly to your lender, go to the Financial Ombudsman Service, or wait for the FCA’s redress scheme, expected to begin in 2026, all of which are free to do.

If you’ve already complained, you’ll be among the first to be contacted once the FCA scheme begins. Lenders are only required to contact customers they can trace [5]. If you’ve moved or your old details have changed, it’s worth ensuring your complaint and contact info are up to date. Complaining now also means your case is already logged and ready for review when the scheme starts.

If you haven’t yet taken action, Reclaim247 can help trace your finance history and submit a complaint on your behalf using just your name, address, and date of birth. No paperwork. No hassle. No win, no fee. This makes the process straightforward for those who may no longer have their original loan documents or dealer agreements.

Should You Consider a Claims Management Company?

As the FCA moves closer to confirming its scheme, some motorists are turning to professional assistance to ensure their claims are handled correctly. A regulated claims management company can manage communications with lenders, gather necessary documents, and ensure compliance with the regulator’s requirements.

A finance claims expert can help if you have several agreements or few records. Their expertise is to locate car finance mis-selling claims and guide their customers to get fair financial compensation for their loss. Customers can approach their lender directly, of course, but professional advice usually means less stress. It may be worth using an expert when working out the details of a commission-based sales process.

Many consumers are also exploring PCP claims, as these agreements were among the most affected by mis-sold commission models. Whether you’re seeking to refund my PCP, claim a car finance refund, or understand how long does car finance claims take to pay out, the key is to stay proactive. Taking early action ensures your case is ready for review once the redress system goes live.

If you’re comparing providers, it’s important to research the best car finance claim company for your needs. Look for firms authorised by the Financial Conduct Authority and transparent about their fees and success rates. Some, like Reclaim247, even outline how long does Reclaim247 take to begin processing typical claims, giving consumers a realistic idea of timescales.

Looking Ahead: The FCA’s Next Steps

The FCA's visit to Detroit will also recognise that this is a global issue for which there are significant numbers of international lenders participating in the UK motor finance market. It will be critical for regulators, banks and car manufacturers to work together to help ensure that redress is fair and proportionate.

Talk about how to get there will continue, but the destination is not in doubt. Regulators want to end years of lack of accountability and transparency over sales practices. That should mean a real chance for motorists to get money back they have lost through opaque commissions and excessive and unfair interest.

For the moment, the advice to consumers is to keep up to date with developments, revisit their old finance agreements and take advice if necessary. But this is not just a story about financial compensation; it is about rebuilding trust in one of the UK's biggest markets for consumer credit.

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References:

1. The regulator’s chief executive jetted to Detroit this week in a surprise visit to meet with high-ranking automotive and finance executives - https://www.thetimes.com/business-money/article/fca-chief-heads-detroit-support-car-finance-scheme-vhnh3fgbn
2. The redress scheme, that could result in millions of motorists getting compensation for unfair commission practices, has been criticised by some lenders - https://uk.finance.yahoo.com/news/why-banks-criticising-car-finance-143036576.html
3. The FCA formally opened its consultation on 7 October 2025 - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
4. £700 per agreement on average - https://www.fca.org.uk/news/press-releases/14m-unfair-motor-loans-compensation-proposed-scheme
5. Lenders are only required to contact customers they can trace - https://www.kslaw.com/news-and-insights/motor-finance-litigation-moves-up-a-gear-with-fca-plan