FCA speeds up motor finance complaint process ahead of redress scheme

The Financial Conduct Authority has set a new timetable that brings forward the resumption of motor finance complaint handling to 31 May 2026, shortening the pause it imposed in January 2024 by two months. According to the FCA, ending the pause earlier gives firms "sufficient time to be ready to respond" and reflects the regulator’s expectation that the majority of complaints will fall within a forthcoming industry-wide redress scheme.

The proposed scheme targets customers who were unfairly sold car loans between 2007 and 2024 because they were not properly informed about commission payments to brokers, including car dealers. The FCA has made clear that complaints falling within the scheme will be governed by specific rules and timeframes. Speaking in its update, the regulator said: "It is likely that we will go ahead with a scheme and complaints that fall within it will be dealt with under specific rules, which will include timeframes for them to be dealt with."

The scale of the issue is substantial. The FCA’s consultation material proposes that around 14 million motor finance deals could be eligible for redress. Industry modelling published by the regulator estimates average redress of roughly £700 per eligible customer , a figure that equates to about £8.2 billion in direct compensation , while other FCA commentary has suggested total costs, once administrative and related expenses are included, could be considerably higher. The mis-selling allegations cite failures to disclose broker commissions and, in some accounts, the use of commission structures that could have pushed up effective interest rates.

Firms have already been required to investigate complaints during the pause, but were not obliged to respond until the pause lifted. The FCA’s decision to bring forward the lift to 31 May means lenders, brokers and motor finance providers must be ready to issue responses and, where applicable, calculate and pay redress under the scheme’s rules soon after final rules are published. The FCA is consulting on how redress should be calculated and on operational timeframes.

The consultation opened in October 2025 and the FCA has extended the deadline for stakeholder responses to 12 December 2025 to allow more time for market participants and consumer groups to analyse the proposals. Final rules are expected to be published in early 2026, with the regulator indicating compensation payments would follow shortly thereafter. The FCA has engaged a range of stakeholders, including lenders, trade bodies and consumer representatives, as it refines the scheme design.

Lenders named in public coverage of the issue, including major banks and specialist motor finance firms, have pushed back on aspects of the FCA’s approach, arguing about scope, causation and the methodology for calculating redress. The regulator, however, has signalled it will retain editorial distance from industry claims and proceed with rules intended to deliver consistent outcomes for affected customers. According to FCA materials, firms should prepare both for complaints that fall within the scheme and for those that may not.

For motorists who believe they may be affected, the critical dates to note are the original pause (January 2024), the consultation window ending 12 December 2025, and the resumed complaints handling from 31 May 2026; the scheme, if confirmed, will cover agreements entered into between 2007 and 2024. The FCA’s consultation documents and statements set out next steps and the likely scope of redress, and will determine precisely how and when eligible consumers are contacted and compensated.

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Source: Noah Wire Services