On 7 October 2025, the Financial Conduct Authority (FCA) published its long-anticipated proposals for an industry-wide redress scheme designed to compensate motorists who may have been overcharged due to undisclosed or unfair commission arrangements in their car finance deals.
Why this matters
At the centre of the issue are Discretionary Commission Arrangements (DCAs) - where car dealers or brokers could raise interest rates on finance agreements to increase their own commission, often without the customer’s knowledge or consent. These practices were banned in 2021, and the FCA’s proposals now outline how consumers affected before that date could receive redress.
It’s estimated that millions of UK drivers could be eligible for compensation, with analysts predicting the total cost to the industry could reach billions of pounds.
What’s been proposed
- The FCA is consulting on how redress should be calculated and paid, with first payments expected in 2026, once the final scheme is approved.
- The proposed framework is intended to provide a clear, consistent route for compensation.
- The FCA has confirmed that this consultation phase will continue through late 2025, with final decisions expected early next year.
The scheme proposal document runs to some 350 pages and can be accessed here: CP25/27: Motor Finance Consumer Redress Scheme
What happens next
At Johnson Law Group, we are committed to ensuring the optimal outcome for our clients. Our specialist PCP team will continue to monitor the consultation closely, provide feedback to The FCA on its proposals and update our clients as further details are confirmed.
It is important to note that the FCA is looking to design the scheme to enable customers to make a claim direct to their bank without the need for legal representation – and of course if you do that you will not need to pay a fee to your solicitor. It is however equally important to note that should it be the case that you do not with to waste time making the claim yourself and negotiating your claim direct with the bank, then JLG’s team of experts is here to help.
For all our clients who we have lodged complaints on behalf of, we will continue to ensure you obtain the very best in advice on your rights and what compensation you are entitled to.
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