Car Finance

FCA Motor Finance Redress Scheme PS26/3 explained: who qualifies and how to claim after the May 2026 court ruling

FCA PS26/3 motor finance consumer redress scheme explained: tier rules, eligibility, how to claim without a CMC, timeline. Covers agreements April 2007 to November 2024.

CDE Editorial Team May 26, 2026 at 8:30 pm 7 min read

FCA PS26/3 motor finance consumer redress scheme explained: tier rules, eligibility, how to claim without a CMC, timeline. Covers agreements April 2007 to November 2024.

What PS26/3 is and what it covers

PS26/3 is the FCA’s final policy statement on the Motor Finance Consumer Redress Scheme, published March 2026 after the consultation paper CP25/27 (published October 2025). The scheme establishes an industry-wide framework for redressing UK consumers who entered car-finance agreements where commission disclosure to the borrower fell short of the standard the FCA and the Supreme Court (in the Johnson v FirstRand decision) determined was required. Key parameters:

In-scope period: regulated motor-finance agreements (PCP, HP, conditional sale, motor leasing classed as regulated credit) originated between 6 April 2007 and 1 November 2024.
In-scope products: any UK regulated motor-finance agreement where the lender paid a discretionary or fixed commission to the dealer/broker and that commission was not adequately disclosed to the borrower in a way that allowed informed consent. The FCA has issued detailed guidance on what constitutes “adequate disclosure” within the scheme.
Out of scope: business-use HP agreements (where the borrower is the company, not a regulated retail customer), pure operating leases, and agreements originated after 1 November 2024 (when the FCA’s new commission-disclosure rules took effect under PS25/18).

The scheme survived a legal challenge in early May 2026 (1 May 2026 hearing) with the FCA defending it as lawful; the FCA published a further statement on 8 May 2026 confirming next steps. The scheme remains in force as of late May 2026 with the FCA proceeding to implementation.

FCA PS26/3 Motor Finance Redress Scheme UK 2026 — Image: gov.uk (OGL)

Two redress tiers: who gets what

The scheme has two distinct compensation tiers. Which tier you fall into depends on the commission structure on your specific agreement:

Tier 1 (Johnson-aligned, full-commission redress): approximately 90,000 cases. Triggered where the agreement involved (a) an undisclosed contractual tie between the dealer and the lender AND/OR (b) Discretionary Commission Arrangement (DCA) AND very high commission, where “very high” is defined as at least 50% of the total cost of credit and at least 22.5% of the loan. These cases receive the FULL commission paid plus interest (8% simple interest under FCA scheme rules).
Tier 2 (hybrid remedy): all other in-scope cases. These receive the AVERAGE of (a) estimated loss based on an FCA-published economic model comparing actual APR on DCA loans versus equivalent flat-fee arrangements, and (b) the commission actually paid, plus 8% simple interest.

Indicative range for Tier 2 redress on a typical £25,000 car-finance agreement signed in 2018: £200 to £1,200 depending on contract specifics. Tier 1 redress on the same agreement (if it met the Johnson-aligned criteria) could be £2,500 to £4,500 or higher, depending on the commission paid.

FCA motor finance commission ruling 2026 redress — Image: gov.uk (OGL)

How to claim: the four-step process

The PS26/3 scheme places the claims process firmly with lenders, not with intermediaries. The FCA has explicitly warned consumers against paying claims-management companies (CMCs) a percentage of the redress; the scheme is designed to be free for consumers and the FCA expects lenders to proactively contact eligible customers from late 2026 onwards.

Step 1: Identify your lender. Check your original car-finance documentation. The lender is the regulated credit firm named on the agreement (not the dealer who arranged it). Common UK motor lenders in scope include Black Horse (Lloyds), Volkswagen Financial Services, BMW Financial Services, Mercedes-Benz Financial Services, Stellantis Financial Services, Toyota Financial Services, MotoNovo, Close Brothers Motor Finance, and many others.
Step 2: Wait for lender contact OR submit a complaint. Lenders are required to write to in-scope customers from late 2026. If you want to claim earlier, submit a complaint to the lender citing the FCA PS26/3 scheme. The lender has 8 weeks to respond.
Step 3: Escalate to the Financial Ombudsman Service if needed. If the lender refuses, partially upholds, or fails to respond within 8 weeks, escalate to the Financial Ombudsman Service. FOS is free for consumers.
Step 4: Accept or refuse the redress offer. An accepted offer settles the complaint; a refused offer keeps the case live for further escalation. You cannot accept partial redress and then claim more later.

The MoneySavingExpert template letter (published since the FCA consultation began) is a good starting point for a self-serve complaint. MoneySavingExpert’s car finance reclaim guide is updated regularly and explicitly free.

UK car finance redress complaint FCA 2026 FOS — Image: gov.uk (OGL)

Timeline: when settlements actually arrive

Late 2026: first lender outreach letters to in-scope customers; first Tier 1 settlements expected before year-end 2026.
2027: bulk of settlements processed. The FCA’s stated goal is for the majority of in-scope cases to be settled by the end of 2027.
2028 and beyond: remaining cases (escalations to FOS, contested claims) cleared through Q1 2028. The FCA expects the total redress pool to reach approximately £7.5 billion across the scheme’s life.

If your car finance is still active and you have a balloon payment refusal or a related dispute, see our separate explainer on PCP balloon refusal and voluntary termination rights. The PS26/3 redress route is independent of any VT or balloon-handling decision; you can pursue both.

FCA PS26/3 motor finance redress timeline 2027 UK — Image: gov.uk (OGL)

Our take

The PS26/3 scheme is the most consumer-favourable motor-finance redress framework the UK has ever produced. If you took regulated car finance between April 2007 and 1 November 2024 you should at minimum check the scheme criteria; for most UK borrowers the Tier 2 hybrid remedy will deliver £200 to £1,200 per agreement, and the Tier 1 Johnson-aligned tier will deliver materially more on the roughly 90,000 cases that meet the criteria. Two non-negotiable rules: (1) do not pay a claims-management company a percentage; the scheme is designed to be free and the major UK lenders are required to proactively contact eligible customers, and (2) if you want to act before late-2026 lender outreach, submit a complaint directly to the lender citing PS26/3 and escalate to FOS after 8 weeks if needed. The MoneySavingExpert template letter is a perfectly serviceable starting point. For more on the regulatory chronology see our coverage of the earlier FCA Motor Finance Redress Scheme and the FCA complaints pause lift.

What is the FCA Motor Finance Redress Scheme PS26/3?

It is the FCA’s final policy statement (published March 2026) on the UK industry-wide redress scheme for motor-finance customers whose commission disclosure was inadequate between April 2007 and 1 November 2024. The scheme survived a legal challenge in May 2026 and is in force. The FCA expects to return approximately £7.5 billion in total redress to in-scope consumers.

Who qualifies for the FCA motor finance redress scheme?

UK consumers who entered a regulated motor-finance agreement (PCP, HP, conditional sale) between 6 April 2007 and 1 November 2024 where the dealer/broker received commission that was not adequately disclosed. Approximately 90,000 cases qualify for the Tier 1 (full-commission-plus-interest) tier where commission was at least 50% of total cost of credit and at least 22.5% of the loan. All other in-scope cases qualify for the Tier 2 hybrid remedy.

How much will I receive under the FCA PS26/3 redress scheme?

It depends on your agreement’s commission structure. Tier 1 (Johnson-aligned) redress on a typical £25,000 finance agreement could be £2,500 to £4,500 or more, depending on actual commission paid. Tier 2 hybrid remedy on the same agreement is likely £200 to £1,200. Both tiers include 8% simple interest under FCA scheme rules. Individual figures depend on the specifics of your contract.

Do I need a claims management company to claim FCA motor finance redress?

No, and you should not pay one. The FCA has explicitly warned consumers against paying claims-management companies a percentage of redress. Lenders are required to proactively contact eligible customers from late 2026 onwards, and self-serve complaints (using the MoneySavingExpert template or your own letter) are free. The scheme is designed to be no-cost for consumers.

When will I receive my FCA motor finance redress payment?

First settlements are expected from late 2026 onwards, with the bulk of cases settled during 2027. The FCA’s stated goal is for the majority of in-scope cases to be cleared by the end of 2027, with remaining escalations cleared by Q1 2028.

Is the FCA motor finance redress scheme still in force after the May 2026 court challenge?

Yes. The FCA defended the scheme robustly at the 1 May 2026 hearing and issued a further statement on 8 May 2026 confirming next steps. As of late May 2026 the scheme remains in force and the FCA is proceeding with implementation. See the FCA PS26/3 policy statement and accompanying news releases for the official position.