On 30 March 2026, the Financial Conduct Authority (FCA) issued its Policy Statement setting out the final rules on motor finance redress.
While the full detail is complex, the key message is clear: although a redress framework is now in place, the rules are far from simple. With different schemes, multiple exclusions, capped payments and detailed calculation methods, many consumers may find it difficult to understand whether they are eligible and what they could receive.
Below, we look at some of the main takeaways from the FCA’s final rules.
1- The average pay-out has increased
One of the headline changes is the increase in the average compensation figure.
The average pay-out has been uplifted from £695, as set out in the earlier consultation, to £830.
For many consumers, this will be one of the most significant updates, as it suggests the FCA has recognised the need for a higher level of redress than originally proposed.
2- There will be two separate schemes
The FCA has confirmed that there will be two schemes covering different periods of motor finance agreements:
- one scheme covering agreements entered into on or after 1 April 2014
- a second scheme covering agreements entered into before 1 April 2014, going back to April 2007
This means eligibility and the way redress is assessed may depend heavily on when the agreement was taken out.
3- Different APRs will apply to each scheme
The FCA has also confirmed different APRs for calculating awards under the two schemes.
For the earlier scheme, awards will apply an APR of 21%. For the later scheme, the 17% figure used in the consultation will apply.
The hybrid methodology has been adopted, although this will operate alongside caps on payments, which may limit the amount some consumers ultimately receive.
4- Some complaints will be excluded
Not all complaints will qualify.
The FCA’s final rules include excluded or non-eligible complaints, including loans where the values exceed 95% of average loan values.
This is one of several limitations built into the schemes and is likely to affect some consumers who may otherwise have expected to be included.
5- Lenders may reject complaints even where high commissions were involved
One of the more controversial points is that lenders can reject complaints where no better deal was available for the customer, even where discretionary commission arrangements (DCAs) or high commissions were in place.
This suggests there is likely to be room for dispute. In practice, many complaints that appear strong on the face of it may still be rejected on this basis alone.
6- Higher-value agreements may fall outside the schemes
Also excluded are agreements where the loan amount exceeded the average loan by double.
In effect, this is likely to apply to premium vehicles with higher values, meaning some consumers with more expensive finance agreements may fall outside the scope of redress.
7- Pay-outs may still be some time away
The implementation dates of 31st June and 31st August suggest that actual pay-outs may not arrive until three to four months later.
That means many consumers may not receive compensation until later this year, with some payments potentially falling into 2027.
8- Lenders do not have to notify every excluded customer
Another important point for consumers is that, where a lender decides an agreement is excluded, there is no obligation to write to the customer.
This could leave some people unaware that their agreement has been assessed and ruled out, unless they take steps to investigate their position themselves.
9- Fewer agreements are now expected to fall within scope
The total cohort of relevant agreements is reduced by around 2 million, with total pay-outs and administration costs to lenders significantly reduced.
This is a major narrowing of the overall picture and may have a significant impact on the scale of redress ultimately paid.
10- Interest on awards will not fall below 3% per year
The FCA has stated that interest on awards will not fall below 3% per annum.
This provides at least a minimum safeguard in relation to the interest element of compensation.
Legal challenges may still follow
In the coming days or weeks, legal challenges to either scheme are likely to be announced.
Whether or not any such challenge delays the implementation dates remains to be seen. For now, consumers should be aware that the position may still develop further.
Why these rules may be difficult for consumers to navigate
Although the FCA has now issued its final rules, the reality is that these schemes are anything but simple.
The detailed methodology for calculating redress, combined with the exclusions, eligibility rules and caps on payments, creates a framework that is unlikely to be straightforward for the average consumer to understand without support.
For anyone who believes they may have been affected by motor finance mis-selling, understanding whether an agreement falls within the scope of the schemes, and whether a complaint could still succeed, may not be easy.
Think you may have a motor finance claim?
If you believe you may have been affected by motor finance mis-selling, Claim My Loss can help you understand your options and whether you may be entitled to compensation.
