The Financial Conduct Authority plans to publish final rules on a motor finance compensation scheme in late March, following its October 2025 consultation.
The Financial Conduct Authority is expected to reveal its final approach to motor finance redress in late March 2026, with the regulator confirming it will publish outside market hours and give advance notice of the exact date.
The announcement follows the FCA’s consultation on an industry-wide compensation scheme launched in October 2025, which received over 1,000 responses from consumers, lenders and industry groups. In a 4 March 2026 update, the FCA said that if it proceeds with a scheme, it expects to publish final rules in late March, with the timing of publication to be outside market hours.
What the Scheme Could Look Like
The proposed changes include a three-month implementation period for most agreements, extending to five months for older deals to allow prompt payouts. Streamlining measures remove opt-out questions for pre-scheme complaints; firms can also use flexible contact methods without requiring recorded delivery.
If approved, millions could receive compensation in 2026 despite the implementation period. Consumers who complained before the scheme starts would be told within three months whether they are owed redress and how much.
The FCA has been investigating mis-selling of motor finance where lenders failed to disclose commissions to car dealers, preventing customers from negotiating better rates. The regulator estimates affected customers could receive an average payout of around £700, with the total cost to lenders projected at up to £11 billion including implementation.
Industry Pushback
Lenders have mounted strong opposition to the scheme. Banks including Santander and Lloyds have warned of market disruption, potential job losses, and reduced access to car finance due to the major costs involved.
But consumer groups support the streamlined changes to speed compensation for those affected by undisclosed commissions that led to higher interest rates.
Warning on Claims Firms
The FCA continues to advise consumers to complain directly to lenders rather than using claims management companies, which typically charge fees of 30% or more. Since January 2024, the regulator has removed or amended over 800 misleading adverts from claims firms.
Source: @TheFCA
Key Takeaways
- FCA expects to announce final motor finance redress rules in late March 2026, with the exact date to be confirmed in advance
- Proposed scheme includes 3-5 month implementation period for prompt compensation payouts
- Over 1,000 responses received to consultation, with final decision still pending
What This Means for Kent Residents
Kent residents with motor finance agreements through dealerships may be eligible for compensation if the scheme proceeds, with potential payouts averaging around £700 according to FCA estimates. Those who believe they were mis-sold finance should complain directly to their lender now to avoid delays and the sizeable fees charged by claims management companies. Local dealerships and bank branches across Kent could face higher costs if the scheme is approved, potentially affecting the availability and pricing of car finance for future customers in the county.