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On 31 March 2026, the Financial Conduct Authority published Policy Statement PS26/3 — the definitive final rules for the motor finance consumer redress scheme. This was not the proposal. This was not the consultation. This was the final answer on how £7.5 billion in compensation will be distributed to approximately 12.1 million UK consumers who were treated unfairly by their car finance arrangements.
This post explains what changed between the October 2025 consultation (CP25/27) and the March 2026 final rules, what the two-scheme structure means for your agreement, and what the April 2026 legal challenge means for your timeline. For background on how we got here, see our guide to the FCA's investigation into motor finance commission or the broader context on mis-sold car finance claims.
What Changed Between the Consultation and the Final Rules
The FCA consulted on a proposed scheme from October 2025 through early 2026. The final PS26/3 rules made several notable changes:
- The total estimated redress was revised down from £8.2 billion (consultation) to £7.5 billion — reflecting a lower assumed uptake rate (75% vs 85%) and tighter eligibility criteria, not lower average payouts
- The eligibility criteria were tightened to exclude agreements where commission was very low (below £120 pre-2014; below £150 post-2014), where no loss occurred, or where the consumer was not actually disadvantaged
- The number of eligible agreements reduced from 14.2 million (consultation estimate) to 12.1 million — again due to the tighter eligibility criteria, not scheme scope
- The FCA added a 3% per annum minimum compensatory interest floor — which was not in the original proposal and directly increases average payouts
- The scheme was split into two parallel programmes to protect post-2014 consumers from delays if the earlier period is legally challenged
The Two-Scheme Structure Explained
The most architecturally significant change in PS26/3 is the split into two schemes. The full guide to DCAs and our post on the three types of hidden commission explain what was being regulated — PS26/3 clarifies how.
Scheme 1: 6 April 2007 to 31 March 2014
The FCA took on regulation of consumer credit from 1 April 2014. Some lenders have challenged whether the FCA has the power to impose a redress scheme for the earlier period, arguing its section 404 powers only apply from 2014. The FCA's position is that unfairness under section 140A of the Consumer Credit Act 1974 does not depend on the FCA's regulatory remit and that the scheme is legally valid for both periods.
By splitting the scheme, the FCA ensures that a successful legal challenge to Scheme 1 cannot delay compensation for the much larger group of consumers with post-2014 agreements. Implementation deadline: 31 August 2026.
Scheme 2: 1 April 2014 to 1 November 2024
This is the main scheme. It covers the period where the FCA's regulatory authority is uncontested. For most consumers, this is the relevant period. Implementation deadline: 30 June 2026.
What the Scheme Covers: The Three Commission Types
PS26/3 covers the same three types of undisclosed commission arrangement detailed in our post on the three types of hidden commission in car finance: DCAs, high commission arrangements, and contractual ties. The key exclusions are:
- Agreements where the commission was below £120 (pre-2014) or £150 (post-2014)
- High-value loans above the 99.5th percentile for their year — these are considered luxury transactions outside the scheme's mass-market scope
- Cases where the lender can demonstrate no loss occurred or that disclosure was fair in the specific circumstances
- Agreements where consumers have already accepted a final settlement, had their complaint determined by the FOS, or had their claim determined by a court
How Compensation Is Calculated
PS26/3 establishes two calculation methods. Our car finance compensation calculator covers the numbers in detail. The headline points:
- Full commission repayment (plus interest): applies where the commission was linked to a DCA and was at least 50% of total cost of credit and 22.5% of the loan amount — the highest compensation tier
- Hybrid remedy (plus interest): applies to all other eligible agreements — the average of the estimated financial loss (using a 17% APR adjustment for post-2014 agreements; 21% for pre-2014) and the commission paid
- Interest: Bank of England base rate plus 1% per annum, with a minimum floor of 3% per annum from the date of the agreement
Key Dates Every Consumer Must Know
For a full consumer-focused breakdown of the payment timeline, see our post on the car finance claim timeline. The critical dates from PS26/3:
30 June 2026 - Scheme 2 implementation period ends — lenders must be ready to pay
31 August 2026- Scheme 1 implementation period ends
3 months after implementation - Lenders must inform complainants whether they're owed compensation and how much
6 months after implementation - Lenders must contact eligible non-complainants and invite them to join the scheme
6 months to respond - Consumers contacted by their lender have 6 months to join the scheme
31 August 2027 - Final deadline — last date to submit a complaint independently
The April 2026 Legal Challenge
On 27 April 2026, the FCA announced that its compensation scheme had been legally challenged by Consumer Voice, a pro-consumer organisation. The precise basis of the challenge is not yet fully known, but Consumer Voice has stated it is not seeking to delay payments to consumers.
The FCA has confirmed the scheme is going ahead and will set out its response shortly. Courts are expected to handle any application on an expedited basis given the significant public interest in timely compensation. PCP Missold will monitor developments and update clients if any material changes arise.
What to Do Now
Whether your agreement is in Scheme 1 (pre-2014) or Scheme 2 (post-2014), the action is the same: submit your complaint now. See our PCP eligibility checker to confirm you qualify, review the lenders we claim against to confirm your lender is in scope, and visit our how it works page for a full walkthrough of what happens after you instruct PCP Missold.
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