Motor finance compensation scheme consultation progress and timing

The Financial Conduct Authority (FCA) has announced further extensions to its consultation on an industry-wide compensation scheme for drivers impacted by the historic car finance mis-selling scandal. The regulator’s statement, published on 5 November 2025, confirms that it launched its consultation on 7 October 2025 and is now moving steadily to finalise proposals on redress for those affected.

Under its proposed scheme, individuals who entered into motor finance agreements between 6 April 2007 and 1 November 2024 may be eligible. The FCA estimates average compensation at around £700 per agreement.

Given the scale of this issue, it is being hailed as one of the most significant consumer-credits redress exercises of recent years and one that many consumers watching the car-finance market will want to follow closely.

FCA extends consultation deadline into motor finance compensation to December 12

In a move signalling the complexity of the process, the FCA confirmed that the deadline for consultation feedback on the redress proposals has been extended from 18 November 2025 to 5pm on 12 December 2025the FCA confirmed that the deadline for consultation feedback on the redress proposals has been extended from 18 November 2025 to 5pm on 12 December 2025 [1].

As reported in industry media, the extension comes after lenders, dealer groups and consumer organisations flagged that the volume of data and the legal-operational burdens are significant.

In its update the regulator emphasised that “we’ve moved at pace since the Supreme Court judgment in August 2025 [2]… we’re 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.”

According to the process set out:

• The consultation opened on 7 October 2025 [3].
• The original closing date was 18 November 2025, but has now been pushed back.
• Final rules are expected in early 2026 (February or March) under the current schedule.
• The regulator noted that while complaints handling had been paused since January 2024 pending this scheme, “complaints cannot be paused indefinitely” and firms must maintain pace.

What’s covered and key details of the consultation

The consultation seeks views on the proposed redress scheme for car-finance customers affected by unfair practices, particularly arrangements where lenders paid brokers or dealers undisclosed commissions, or where commission influenced interest rates.

Eligible agreements will cover those taken out between 6 April 2007 and 1 November 2024.

Under the scheme, the FCA expects an average compensation figure of about £700 per agreementthe FCA expects an average compensation figure of about £700 per agreement [4]

Some of the core issues the consultation asks for feedback on include:

• How redress should be calculated, including compensatory interest and how to reflect commission arrangements in redress.
• The scope of the scheme, particularly the time-period and which types of commission/arrangements are covered.
• How smaller lenders or those with fewer eligible agreements can take part cost-effectively.
• Measures to prevent fraud, and how to ensure sufficient independence and oversight (for instance involvement of the Financial Ombudsman Service).

In parallel to the consultation, the FCA noted that 11 lenders involved in its earlier investigation had been provided data since 16 August 2024. Industry commentary suggests that the eventual cost to lenders could run into multi-billion-pound levels, given the scale of agreements and the prevalence of undisclosed or mis-disclosed commission practices.

For consumers, the practical impact is this: if you believe you took a motor finance agreement in the relevant period and may not have been told about commission that influenced your deal, you may be eligible. The FCA’s consumer guidance explains how.

Importantly, participation in the scheme is expected to be simpler than court-based claims; many cases will be handled automatically by the lender once eligible, without the need for legal representation.

Considering the services of a claims-management company

If you are exploring your options for redress, you may be wondering whether to engage Reclaim247 or similar claims management company (CMC) for help. The market is already using anchor terms like “car finance mis-selling claims”, “PCP claims”, “best car finance claim company”, as the issue gains visibility.

Here’s what to keep in mind:

• You can choose to complain directly to your lender or go via the Financial Ombudsman Service, at no cost. The FCA emphasises you don’t need to use a CMC. But if you prefer help tracing your finance history, submitting the complaint and staying on top of deadlines, a CMC may offer convenience.
• Make sure any service you use is clear about fees, risk and what happens if you don’t get compensation.
• If you’ve already complained, you will likely be among the first contacted when the scheme starts. Ensuring your contact information is current is recommended.
  So whether you are simply looking to refund my PCP or you’re assessing how long does a PCP claim take or how long do car finance claims take to pay out, the practical steps you take now matter.

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.

Why take action now?

• 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 complained yet, 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 regulatory development underscores the rising stakes in the wake of the car-finance mis-selling era. Whether you’re holding a Personal Contract Purchase (PCP) agreement, or another form of motor finance, the window is open to assess whether you may have been affected and should act accordingly.

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References:

1. the FCA confirmed that the deadline for consultation feedback on the redress proposals has been extended from 18 November 2025 to 5pm on 12 December 2025 - https://www.fca.org.uk/news/statements/motor-finance-compensation-scheme-consultation-progress-and-timing
2. Supreme Court judgment in August 2025 - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
3. The FCA consultation opened on 7 October 2025 - https://www.fca.org.uk/news/statements/fca-consults-motor-finance-compensation-scheme
4. the FCA expects an average compensation figure of about £700 per agreement - 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