FCA Proposes Motor Finance Redress Scheme

The Financial Conduct Authority has put forward proposals for a Motor Finance Redress Scheme, according to analysis published by Stephenson Harwood. The scheme could offer compensation to consumers who were treated unfairly when purchasing vehicles on finance.

The proposals form part of ongoing regulatory scrutiny of the motor finance sector following concerns about mis-selling, undisclosed commission arrangements, and inappropriate lending practices. Millions of UK drivers have purchased vehicles using finance products like PCP (Personal Contract Purchase) and HP (Hire Purchase) in recent years.

Stephenson Harwood's legal analysis examines the regulator's emerging plans, though final details are yet to be confirmed. Key questions remain around eligibility criteria, how compensation would be calculated, and whether consumers would need to actively claim or receive automatic redress.

The FCA is expected to publish its final rules in early 2026. Consumers who believe they may have been affected by unfair motor finance practices are advised to keep their original finance agreements and any related correspondence.