The FCA’s motor finance redress scheme is the largest UK consumer-finance compensation effort of the decade. The press release figures the rest of the press has run with: 12.1 million eligible agreements signed between 6 April 2007 and 1 November 2024, an £830 average payout. What the press release does not say, and what most coverage has skipped, is that there are three discrete eligibility tests. A borrower has to fall into at least one of them. A large share of motor finance deals signed in that window meet none.
What the scheme covers
The scheme covers car finance for any motor vehicle: cars, motorbikes, vans, campervans. The 12.1 million figure is the FCA’s estimate that around 37% of all car finance agreements made in the eligible window will trigger one of the three tests. That leaves the other 63% with deals signed in the same window but no compensation entitlement. Personal Contract Hire leases are explicitly out. Business-purpose loans are explicitly out. Pre-6 April 2008 deals above £25,000 are explicitly out.
The three tests
For an agreement to be eligible, it must meet at least one of three specific criteria related to the commission structure. The tests are not interchangeable. Each describes a distinct conflict of interest.
Test 1: Discretionary Commission Arrangements (DCA)
The broker had the discretion to raise the customer’s interest rate above the lender’s minimum, with a higher rate paying the broker more commission.
This is the test most outlets actually explain, and it is the cleanest one to verify. Under a Discretionary Commission Arrangement the lender provides a range of permissible interest rates and the broker is allowed to choose a higher one within that range. The broker’s commission goes up with the chosen rate. The customer pays more interest over the life of the loan. If your finance paperwork shows the broker chose your rate inside a stated band, you fit Test 1.
Test 2: High commission
The total commission paid on the agreement was at least 39% of the total cost of credit.
This is the test most likely to surprise borrowers. It does not require any DCA. It does not require any disclosure failure. It only requires that the broker’s commission was at least 39% of the total cost of credit on the deal. The total cost of credit is the figure on your original credit agreement that includes interest and any other charges you paid to take out the loan. If you have an old finance schedule that shows the commission paid by the lender to the broker, divide that figure by the total cost of credit. Above 39% you fit Test 2.
Test 3: Contractual ties
The broker used only one lender for car finance, or had given one lender a right of first refusal on the customer’s business.
This test catches the smaller dealer arrangements where the broker was contractually tied to one finance house. A right of first refusal works the same way: the broker had to offer your business to one specific lender before approaching any other. If the only finance offer you were ever shown was from one lender, you fit Test 3.
When the scheme actually starts
The scheme launches in two waves. For agreements made from 1 April 2014 onwards, the scheme launches on 30 June 2026. For agreements made before 1 April 2014, the scheme launches on 31 August 2026. Lenders are required to identify their eligible customers and contact them within six months of the relevant launch. Customers then have six months to respond. The borrower does not need to apply. The duty sits with the firm that wrote the loan.
The four legal challenges
On 27 April 2026 the FCA confirmed the scheme had been challenged and that this would delay payouts. By 1 May 2026 four challenges were on the record: Consumer Voice (a limited company represented by Courmacs Legal Ltd), Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance. The FCA’s stated position on 1 May 2026 is that it will defend the scheme robustly as lawful and the best way to resolve a widespread issue, and is engaging with both lenders and consumer groups in parallel.
What to do now
Find your old paperwork. Run the three tests. Wait.
The paperwork to look for is the original credit agreement and any commission disclosure the broker provided. The credit agreement gives you the total cost of credit. The commission disclosure, if you got one, gives you the figure you need for Test 2. Test 1 and Test 3 usually have to be reconstructed from memory and any sales correspondence you kept.
The legal challenges will push the contact dates beyond 30 June 2026 for newer deals and 31 August 2026 for older deals. Late 2026 is the earliest realistic contact window.