The Financial Conduct Authority's compensation scheme for car finance is final, but payouts are on hold. Parts of the scheme are suspended while a legal challenge is heard, and the FCA says the hearing is set for 16 February to 3 March 2027, with a judgment in the months after. Until then lenders do not have to calculate or pay compensation. If the scheme is upheld and not appealed, the FCA expects payments to begin in 2027; consumer groups such as MoneySavingExpert think it could be later. The best thing you can do now is make sure you have complained to your lender, and avoid paying anyone a cut to do it for you.
Who the scheme covers
According to the FCA's car finance complaints page, updated on 3 November 2026, the scheme covers motor finance for cars, motorbikes, vans and campervans taken out between 6 April 2007 and 1 November 2024. The FCA's average estimate is around £830 per agreement, though individual amounts vary and some people will get nothing.
MoneySavingExpert's car finance reclaim guide adds useful detail on scope: it covers PCP and hire purchase, agreements already paid off, and cars that were repossessed or sold. It lists leases, limited company borrowing and genuine 0% deals among the exclusions. It also notes the FCA's estimate of about 12 million agreements in scope.
What the delay means
The scheme was confirmed in the FCA's policy statement on 30 March 2026 and was originally meant to start paying in summer 2026. Legal challenges changed that. The practical effect today:
- Lenders still have to respond to complaints, but the timing is uncertain while the challenge runs.
- Lenders do not have to work out or pay compensation until the legal process ends.
- Some lenders may make settlement offers in the meantime. The FCA names Barclays Partner Finance as having said it will make offers to some customers.
The FCA's expected response dates for complaints already made are 18 November 2026 for agreements from 1 April 2014 onwards, and 18 January 2027 for older agreements. Later complaints should get a response within five months.
If you get a settlement offer
This is where people can lose out. The FCA says any offer should be no less than you would get through the scheme, but accepting an offer is final. You cannot claim more later and you cannot ask the Financial Ombudsman to review it. Before signing anything:
- Check the offer letter shows how the figure was worked out, including any interest.
- Check it relates to the right agreement. People with several finance deals over the years sometimes get letters that mix them up.
- Check the lender's details against the FCA's own list before replying. Scammers have copied genuine-looking letters.
If the scheme later produces a redress decision you disagree with, the FCA says you will have one month to accept or challenge it, and can then go to the Financial Ombudsman Service. Read the deadline in your letter.
Do you need a claims firm or a solicitor?
No. The FCA states plainly that you do not need a claims management company or a law firm to take part or to check whether you are eligible. Fees can be up to 36% of your compensation including VAT. On an average-sized payout that is a large slice for something you can do with a letter or an online form.
If you have already signed up with one:
- Make sure you have not signed with more than one firm for the same agreement.
- If you want to leave, any exit fee should be reasonable and reflect work actually done. Ask for an itemised breakdown.
- If you were signed up without consent, misled or treated unfairly, the FCA says you can ask to exit free of charge.
- Complain to the firm first. If there is no reply within eight weeks, or you are unhappy, go to the Legal Ombudsman for a law firm or the Claims Management Ombudsman for a claims company.
How to find your old lender
Many people bought a car through a dealer and never really knew who the lender was. The FCA suggests old bank statements, the dealer itself, or your credit file. A finance agreement taken out in the last six years will usually appear on your credit report; older ones may not, so paperwork matters more for pre-2020 deals.
Once you know the lender, complain directly using their published complaints route. Keep it short: your name, address at the time, the car and registration if you have it, the approximate dates, and a request for the lender to review the agreement under the FCA's motor finance redress rules.
Scams to watch for
A big compensation scheme brings cold calls and fake letters. The FCA's rules are simple: never pay a fee to receive compensation, and never give out a PIN or password. A genuine lender will not ask for either. If a call feels off, hang up and contact the lender using the number on its own website or on the FCA list.
Buying a car on finance now
The issues behind the scheme concerned how dealer commission was set and disclosed on older agreements. If you are financing a car today, ask the dealer whether they receive commission and how it is calculated, compare the APR with what your bank would offer, and read the agreement before signing. For buyers on a smaller budget, our guide to buying a used car under £5,000 covers checks worth doing whether you pay cash or borrow, and you can confirm a car's history with the free MOT check described in our MOT guide.
Where things stand in mid-November 2026Scheme rules are final. Payments are paused pending a hearing on 16 February to 3 March 2027. Complain to your lender if you have not. Do not pay a fee to anyone to receive compensation.
This article is general information rather than financial or legal advice. If your circumstances are complicated, for example several agreements, a business borrower or a repossession, free help is available from MoneyHelper or Citizens Advice.