PS26/3: Motor finance consumer redress scheme

Read PS26/3

What we are changing

Most respondents to our consultation (CP25/27) agreed that an industry-wide scheme, free for consumers to use, would be the best, most efficient way to compensate consumers, while ensuring a well-functioning market.

We have listened to feedback and made changes so the final scheme is fair to consumers and proportionate for firms.

The scheme will put £7.5 billion back in people’s pockets with millions of claims settled in 2026 and the vast majority by the end of 2027. And it will provide firms with certainty and finality to support the long-term availability of competitively priced motor finance.

Who this is for

This policy statement will be of interest to lenders, brokers, consumers and consumer organisations, and motor finance and professional trade bodies.

Next steps

There will be a short implementation period so firms can prepare to operate the scheme. This will be up to:

• 30 June 2026 for loans taken out from 1 April 2014.
• 31 August 2026 for those agreed earlier.

Supporting documents

We have published several documents alongside the policy statement:

• Technical Annex 1: Updated data, analysis of loss, and liability and cost methodologies.
• Technical Annex 2: Market Impacts.
• Consumer research survey – and technical report – analyses awareness of the relationship between vehicle dealerships and motor finance companies.
• Updated diagnostic report – our March 2026 version reviews motor finance commission arrangements.
• Motor finance redress scheme firm-led communications: insights from consumer and behavioural research and supporting annex.
• We’ve also published motor finance compensation scheme factsheets: for customers invited to join the scheme and for customers who have complained to their firm.

Background

In October 2025, we published our consultation paper on a proposed motor finance consumer redress scheme (CP25/27) for motor finance customers who were treated unfairly.

In December 2025, we further extended the time (PS25/18) firms have to send final responses to all relevant discretionary commission arrangement (DCA) complaints and non-DCA commission complaints.