FCA Demands Action as Car Finance Redress Looms

Introduction

The UK's financial watchdog, the Financial Conduct Authority (FCA), has taken a firm and public stance on the car finance scandal, signalling that a huge, industry-wide compensation scheme is on its way. After its own investigations uncovered widespread harm to consumers from hidden commissions, the regulator is now taking steps to ensure that millions of affected drivers receive the redress they are due.

This official action is the clearest sign yet that compensation is coming. Here’s a breakdown of what the FCA is doing and why it’s crucial to log your claim as soon as possible.

The FCA’s Journey: From Investigation to Redress

The FCA has been methodically tackling this issue for years:

• The Investigation: Between 2017 and 2019, the FCA’s market study first raised alarms about the widespread use of Discretionary Commission Arrangements (DCAs) and the potential for consumer harm.

• The Ban: Based on its findings, the FCA banned DCAs in the motor finance market from 28 January 2021.

• The Review: In January 2024, concerned by the high number of complaints being unfairly rejected by firms, the FCA launched a formal review into the historical use of these commission models.

• The Pause: To ensure an orderly resolution, the FCA paused the normal 8-week deadline for firms to respond to complaints until after 4 December 2025. This was a strategic move to prevent the system from collapsing and to allow time to design a fair process for everyone.

What is the Redress Scheme?

The FCA has announced it will consult on an industry-wide redress scheme in October 2025. This will likely be established under Section 404 of the Financial Services and Markets Act, a powerful tool that allows the regulator to set the rules for compensation across the entire industry.

Such a scheme would force firms to:

• Follow a standardised method for calculating compensation.

• Treat all affected consumers consistently and fairly.

• Potentially proactively contact customers they identify as being impacted.

The FCA is determined to avoid the pitfalls of past schemes like PPI and deliver an efficient and fair outcome.

Why You Must Act Now

While the formal scheme will handle the payouts, the sheer volume of claims will be immense. Lenders will need to hire huge numbers of additional staff just to cope with the sheer volume of claims. Overall lenders will need to process millions of agreements going back to 2007, creating an inevitable operational backlog. 

By submitting your claim with us today, you secure your place in the queue. When the process officially begins, your case will already be logged and waiting, putting you ahead of those who wait.

PCPclaimDirect: Your Regulated Partner

As an FCA-regulated claims management company, we understand the regulatory landscape. We will:

• Formally submit your complaint now to secure your position.

• Manage all communications during the FCA's pause.

• When the scheme launches, scrutinise any compensation offer to ensure it is fair and accurate.

All this is done on our No Win, No Fee promise. The regulator is ensuring justice is done; we’re here to make sure the process is simple for you.