The Financial Conduct Authority (FCA) has proposed a redress scheme for motor finance customers who may have been treated unfairly and subsequently overpaid on car finance.
On 7 October 2025, the FCA published plans for a compensation scheme, stating that it is the best way to ensure that consumers who have lost out receive fair compensation in the most consistent and efficient way.
This announcement will have a significant effect on the whole UK motor finance industry, with funders having until mid-November to respond to the proposed scheme and the parameters that are included in it. Estimated redress currently sits at £8.2 billion.
But how did we get here? And how can we ensure we don’t arrive at this juncture again?
The Background
On 1 August 2025, the UK Supreme Court handed down a landmark decision on discretionary commission arrangements (DCAs) and fiduciary duties. The ruling confirmed that, in certain circumstances, finance providers may have entered into unfair relationships with consumers – meaning commission plus interest could be repayable. Crucially, however, the Court also decided that car dealers did not have to put consumers’ interests ahead of their own.
The fallout is significant. While some consumers may now miss out on redress, the judgment has sharpened the focus on motor finance funders. The Financial Conduct Authority has already announced plans for a compensation framework, and scrutiny of how dealers and brokers are overseen has never been greater.
Oversight Is No Longer Optional
For funders, this ruling is a call to action. Oversight of dealers and brokers – especially around commission disclosure and Consumer Duty – is not just a regulatory expectation, it’s a reputational safeguard. Yet the reality can be messy. Today, many finance houses rely on a patchwork of annual reviews, questionnaires and ad-hoc visits. Dealers and brokers are asked for the same information multiple times in multiple formats.
