Finance commissions ruling - live updates
We'll continue updating our live blog with the latest developments on the finance commission disclosures as more information becomes available, ensuring Autotrader partners stay informed with real-time insights. In the meantime, check out our useful resources.
On the 7th October, 2025 - the FCA issued a statement to the market revealing its proposals for compensating up to 14 million car buyers (circa 44% of those made since 2007) eligible for mis-sold motor finance claims.
If adopted, the FCA expects to publish final rules and policy in early 2026, with the scheme launching shortly thereafter and consumer redress payments beginning later in 2026.
The key elements of the proposals are;
The FCA proposes a redress scheme for drivers who took out motor finance between 2007 and 2024 and were charged unfairly high interest rates due to undisclosed broker commissions, which could cost lenders up to £8.2 billion. The cost of administering the scheme could add another £3 billion to the industry's costs (I’ve seen conflicted numbers on the additional cost, but certainly over £2bn).
Around 14 million agreements could be affected, with average payouts of about £700 each.
The consultation runs until 18 November 2025, and final rules are expected in early 2026. Payments to consumers are expected to begin by the end of 2026.
Consumers who are concerned they weren’t told key details about their motor finance arrangement, for example, about commission payments, are urged to complain to their lender now if they haven’t done so already. Those customers who had not complained will be contacted by their lender within six months of the scheme starting. Consumers do not need to use a claims management firm, said the FCA, and can do so by downloading a letter template from its website.
The scheme aims to make getting compensation simpler, faster, and free, avoiding lengthy court cases - consumers can choose not to take part in the FCA’s compensation scheme and instead go to court, where they may get more or less compensation, based on the facts of their case. However, the outcome of a court claim is uncertain and accounting for legal fees they may pay, many consumers could end up with less. The FCA’s scheme is also likely to be faster and simpler than going to court.
Consumers who already complained will be automatically included unless they opt out; others will be invited to opt in when contacted by their lender.
The FCA will monitor if firms are meeting the proposed scheme’s rules and will act if they’re not. If people disagree with their firm’s decision, the Financial Ombudsman will be on hand to assess whether the scheme rules have been followed.
People will only receive compensation under the scheme proposed if they weren’t told details of at least one of three arrangements between the lender and the broker who sold the loan, often a car dealer, which are found in some motor finance agreements:
A discretionary commission arrangement, which allowed the broker to adjust the interest rate the customer would pay to obtain a higher commission
A high commission arrangement (35% of the total cost of credit and 10% of the loan)
A contractual arrangement or tie between the lender and broker, which provided exclusive or near exclusive rights to lenders to provide credit.
Nikhil Rathi, chief executive of the FCA, said: "Many motor finance lenders did not comply with the law or the rules. Now we have legal clarity, it’s time their customers get fair compensation. Our scheme aims to be simple for people to use and lenders to implement. We recognise that there will be a wide range of views on the scheme, its scope,
timeframe and how compensation is calculated. On such a complex issue, not everyone will get everything they would like. But we want to work together on the best possible scheme and draw a line under this issue quickly. That certainty is vital, so a trusted motor finance market can continue to serve millions of families every year.”
The FCA's consultation is now open to the wider motor industry. You can contribute here.
FCA redress: What’s coming and who pays the price?
The FCA’s proposed redress scheme will become one of the most significant developments for the automotive industry in recent years, and its impact will be felt right across the industry.
The consultation is ongoing, and is being strongly contended by many, with the final outcome due to be shared in early 2026.
In this webinar, we’ll break down the FCA’s proposed scheme, discuss the contended areas, and also get views on whether the FCA will make changes to it.
You can watch this discussion by clicking the button below.
Supreme Court’s ruling on finance commissions - your questions answered
During the webinar, we received many questions from our audience, and we answered the most frequently asked ones in this FAQ blog. Check it out to find answers to the questions in the following themes:
Redress scheme
How to sell finance now
FCA rules
Wider implications of the ruling
Current lender status
Following the Supreme Court judgment, no lenders or brokers have stopped or paused lending activity. As we gain further clarity, we will share any relevant lender and broker updates here
What are the two types of car finance mis-selling cases currently being discussed?
Discretionary commission arrangements (DCAs).
This applies to about 40% of car finance deals, and is where brokers and dealers could increase the amount of interest they charged customers (without telling them) on Personal Contract Purchase (PCP) and hire purchase agreements up to 2021. If they did so, they got increased commission.
This is NOT the case the court the court ruled on
Commission disclosure complaints
This IS the decision the Supreme Court ruled on.
Last year, the Court of Appeal shocked many, including the regulator, the lending industry and politicians by ruling that if car finance agreements didn't tell consumers all details of commission, including the amount, in a clear and obvious way, not just buried in the small print of the finance paperwork, they were acting unlawfully.
This applies to up to 99% of car finance (so all those with DCA cases as well)
What was the outcome?
The Supreme Court ruled on three associated cases. 2 appeals were upheld (meaning the lenders were successful in their appeal and the consumers’ cases were dismissed). A third, was dismissed, meaning the Court ruled in favour of the consumer.
The issues assessed by the Supreme Court were:
Did a lack of commission disclosure constitute a bribe?
Does a retailer have a special responsibility to the consumer to act in their best interest (fiduciary duty)?
Was the amount of commission paid for a particular deal considered fair?
The outcome was as follows:
Fiduciary duty: It was found that retailers do not owe a fiduciary duty to a consumer. This means that a retailer is not obliged to act solely in the consumer’s interest.
Bribery / secret commission: because of the above finding, this claim is rejected as there is no legal basis for it.
One of the claims (Johnson vs. FirstRand), made under the Consumer Credit Act, was upheld, with the Court ruling that the size of the commission paid was unfair.
The Court pointed out that their judgment was based on the facts of this specific case.
Although the consumer was presented with the information at the time, this was not deemed sufficient.
Will lenders pause trading again?
We haven’t seen any sign of this so far, with lenders continuing business as usual for now.
In October, when the original Court of Appeal judgment was handed down, we saw a number of lenders pausing business in the immediate aftermath as they understood the ramifications on their processes. They’d just been told that the way in which they’d been selling finance (via retailers) was unlawful, so it stopping this was a logical thing to do.
Could some lenders go out of business?
This still remains uncertain until the full details of the redress scheme are known.
The introduction of an FCA Taskforce
On the 31st of March 2026 the FCA announced a joint taskforce with the Solicitors Regulation Authority (SRA), Information Commissioner’s Office (ICO), and Advertising Standards Authority (ASA) to tackle the poor handling of motor finance claims, as the FCA prepares to set out its final compensation scheme for motor finance. The aim of this task farce is to share intelligence and work together to take focused action, using their combined power to protect consumers from harm.
Spokesperson Rachael Jones, Director of Motor Finance at Autotrader has said,
“We support this pragmatic and proportionate approach from the FCA that strikes the right balance between ensuring robust protection and transparency for consumers, while underpinning the stability of an automotive sector that contributes billions to the UK economy every year. It’s vital that this scheme doesn’t inadvertently impact a market that has adpated and is now working well for consumers….Our priority remains supporting both 10million monthly visitors and our retail partners to ensure buyers continue to have the confidence, control and choice they need when financing their next vehicle”
Confirmation of the FCA Finance Redress Scheme 2026
As of 30th of March 2026 the FCA has updated and confirmed the final financial redress scheme.
The eligibility has been tightened, so that those who have been treated unfairly will receive compensation. Agreements that involve very low commission or 0% APR won’t qualify for compensation. Alongside this, simply having a link between a lender, dealer, and manufacturer alone won’t be enough to trigger a payout. Also, the threshold for high compensation cases has been modestly raised. Because of these changes, fewer agreements are now eligible about 12.1m agreements are now eligible, down from 14.2m at consultation.
The FCA has also made changes to how compensation will be calculated to better reflect greater loss between 2007-2014. They have also taken steps to ensure that consumers won’t be put in a better position than they would have originally been in had they been treated fairly in the first place. This ensures that no one will end up better off but everyone will receive fair compensation. Around 1-in-3 compensations will be capped and the expected pay out from firms has dropped from £8.2bn to £7.5bn. The FCA has introduced steps to streamline the compensation process to make it quicker and cheaper to facilitate. Millions are expected to receive their compensation this year with the remainder to be paid by the end of 2027.
Updated Scheme
Eligibility for the scheme
Motor finance agreements taken out between 6 April 2007 and 1 November 2024 where commission was payable by the lender to the broker will be considered for compensation
Consumers generally have 6 years to bring a claim, but that may be extended where information about commissions or a tie was deliberately concealed.
Consumers will only be considered for compensation if they weren’t told detailer of at least 1 of 3 arrangements between the lender and the broker (usually the dealer)
A discretionary commissions arrangement (DCA), which allowed the broker to adjust the interest rate the customer would pay to obtain a higher commission
A high commission arrangement (at least 39% of the total cost of credit and 10% of the loan)
Contractual ties that gave a lender exclusivity or a right of first refusal, expect when the lender can prove there were visible links with the manufacturer and dealer.
There will be some exceptions, with cases considered fair if
o The commission was £120 or less for agreements beginning before 1 April 2014 and £150 or less from that date.
o The borrower wasn’t charged interest
o The DCA wasn’t used to earn discretionary commission
o The lender can prove, in certain limited circumstances, it was fair not to disclose one of the arrangements above or the consumer did not suffer any loss. This includes if a tie wasn’t operated in practice or no better deal was available.
Exclusions from the Scheme
Consumers who have successfully complained to the Financial Ombudsman, had their claim determined by a court or accepted redress.
Claims for high value loans, higher than 99.5% of other loans that year.
Firms can exclude cases only involving high commission and ending before 26 March 2020 if they can show that the fact commission was payable was clearly and prominently disclosed. If the firms rule consumers out of the scheme on this basis they must inform them and explain why.
How the scheme will operate
30 June 2026 for loans taken out from 1 April 2014
31 August 2026 for those agreed earlier
People who have already complained or complained before the end of the relevant implementation period will be compensated earlier.
Lenders will have 3 months from the end of the implementation period to let complainants know if they’re owed compensation and how much
Firms will only have to contact people who haven’t complained if they’re potentially owed more or those who are timed out of the scheme
Firms have 6 months from the end of the relevant implementation period to do so
Consumers must respond within 6 months to join the scheme
Consumers who aren’t contacted can still complain by the 31 August 2027
Calculating redress
Around 90,000 people whose cases align closely with the Johnson case will receive redress of all commission plus interest
For all other cases, people will receive the average of estimated loss and the commission paid plus interest (hybrid payment)
For agreements from April 2014 onward
o Loss is based on about 17% APR adjustment
For agreements before April 2014
o Loss is based on about 21% APR adjustment
o Feedback and supporting evidence has showed that more harmful forms of DCA were prevalent in earlier years.
About 1-in-3 people getting the ‘hybrid payment’ will have their compensation capped
The cap will be the lowest of these 3 amounts
90% of the commission they paid + interest
The total cost of the loan, adjusted to a fair minimum for rare low cost deals (not 0% deals)
The actual total cos of the loan
Because of this around 64,000 agreements where the APR was in the lowest 5% offered in the market at the time (excluding 0% APR) will not get any compensation.
The interest on compensation will be
o Added at the Bank of England base rate +1% per year
o Minimum interest guaranteed at 3% per year
o Consumers won’t be able to challenge the rate they get
The FCA have conducted an updated analysis of the schemes potential impact on the market and have concluded that there will be limited impact on the new car finance market. The changes make to how the scheme operates, such as removing the need to write to every customer should benefit sub-prime and smaller lenders by ensuring the scheme is cost-effective. While some short-term disruptions is expected in the used car segment of the market, the FCA expect this to be a modest, with any reduction in lending volumes expected to recover over time.
Useful resources
This section will be updated as more resources become available.
Autotrader Monthly Finance Insight July 2025 - here
Supreme Court ruling webinar (6th August) – Catch up here
Post-Supreme Court ruling FAQs answered - here
Post-Supreme Court checklist for dealers from Auxillias - here
The Supreme Court's decision overview from Auxillias - here
Supreme Court Announcement (1st August) – link here
Regulators launch joint taskforce (30 April 2026) - link here
FCA confirms motor finance redress scheme (30 April 2026) - link here