London, 5 April 2026 — The Financial Conduct Authority's (FCA) landmark investigation into discretionary commission arrangements (DCAs) in the motor finance sector has confirmed what consumer advocates have argued for years: hundreds of thousands of UK consumers were systematically overcharged on Personal Contract Purchase (PCP) agreements and Hire Purchase (HP) contracts through a commission structure that created a direct financial incentive for lenders and brokers to inflate interest rates at the customer's expense.
Following the Supreme Court's landmark judgment in Hopcraft, Johnson and Wrench [2025] UKSC 33 (1 August 2025) and the FCA's publication of its final redress scheme rules (PS26/3) in March 2026, affected consumers now face a defined and time-limited window in which to secure their entitlement to compensation.
FCA PS26/3 Redress Scheme — Key Figures
The FCA's Findings: A Systemic Failure of Consumer Protection
The FCA's DCA review, substantially expanded following the Court of Appeal's ruling in Hopcraft & Others v Close Brothers Ltd (October 2024) and the Supreme Court's judgment (August 2025), identified a widespread industry practice in which motor finance brokers — typically car dealerships — were granted discretionary authority to set the interest rate on finance agreements up to a specified ceiling. Crucially, broker commission was directly linked to the interest rate set: the higher the rate, the higher the broker's commission.
This arrangement created what the FCA described in its September 2024 Preliminary Findings Report as a "fundamental conflict of interest" — brokers, acting as the consumer's agent, had a direct financial incentive to act against the consumer's interest by maximising the cost of their finance agreement. The FCA estimated that affected customers typically paid between £1,000 and £3,000 more over the life of their agreement than they would have paid had the commission arrangement been disclosed and the interest rate set independently.
The FCA's Policy Statement PS26/3 (published 30 March 2026) establishes the mandatory industry-wide consumer redress scheme. The scheme covers an estimated 12.1 million agreements and affects consumers who took out motor finance between 6 April 2007 and 1 November 2024.
Legal Framework: Consumer Credit Act 1974 and Common Law Duties
Section 140A — Unfair Relationship (Primary Legal Basis)
This is the primary surviving legal basis following the Supreme Court's ruling in Hopcraft, Johnson and Wrench [2025] UKSC 33. The Supreme Court confirmed that claims under Section 140A of the Consumer Credit Act 1974 remain fully available where commissions were inadequately disclosed — particularly where commission payments represented a substantial proportion of the credit advanced.
In Johnson, the Supreme Court awarded the consumer compensation equal to the full commission amount plus interest, on this statutory basis alone.
Section 56 — Lender Liability for Broker Conduct
Section 56 of the Consumer Credit Act 1974 holds lenders directly responsible for the conduct of their appointed representatives (dealers/brokers) acting in the antecedent negotiations of a regulated credit agreement. The Supreme Court's reversal of the Court of Appeal on fiduciary duty does not affect s.56 liability — where a dealer/broker failed in their regulatory obligations to the consumer, the lender bears joint liability under this provision.
Limitation Period: Extended by Deliberate Concealment
Claims under the Limitation Act 1980 ordinarily must be brought within six years. However, under Section 32 of the Limitation Act, where there has been deliberate concealment of material facts (as the FCA's findings suggest is the case for undisclosed commission arrangements), the six-year clock does not begin until the claimant discovered, or with reasonable diligence could have discovered, the concealment. This provision has been consistently applied in financial mis-selling contexts — extending the effective claim window for many consumers beyond the standard six-year period.
What Compensation Looks Like: Average Amounts and Calculation Basis
Based on published Financial Ombudsman Service (FOS) data, court judgments to date, and FCA redress modelling, the typical PCP mis-selling compensation award comprises:
- Interest Rate Differential: The difference between the interest rate actually charged and the rate that would have been applied absent the commission incentive, calculated over the full term of the agreement. On an average UK PCP agreement of £17,500 over 4 years, this typically represents £850 to £2,500 in excess interest charges.
- Consequential Losses: In cases where the inflated finance cost caused demonstrable financial hardship (missed payments, adverse credit entries), additional damages may be recoverable.
- 8% Statutory Interest: Courts routinely apply 8% per annum simple interest on damages from the date of the original loss — significantly increasing the final award value for older agreements (2007–2015).
FCA Redress Scheme Comparison
The FCA estimates total redress of £9.1 billion under PS26/3 (average £829 per agreement). By comparison, the PPI mis-selling redress scheme returned over £38 billion to UK consumers between 2011 and 2019 — this scheme is smaller in scale but follows the same mandatory compensation framework.
How to Check Your Eligibility
Under PS26/3, consumers who entered into a PCP or HP motor finance agreement between 6 April 2007 and 1 November 2024 may be eligible if they were not informed about at least one of three commission arrangements:
- Discretionary commission arrangements allowing broker rate adjustments
- High commissions representing 39% or more of credit costs
- Contractual exclusivity ties between lender and broker
Consumers in this group should take the following steps:
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1
Obtain your finance agreement documents Lenders are legally required to provide a copy of your original credit agreement under Section 77–79 of the Consumer Credit Act 1974, free of charge, within 12 working days of a written request.
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2
Check for commission disclosure If your agreement does not explicitly state that the dealer was paid commission by the lender, and the interest rate charged was variable at the dealer's discretion, you have grounds to investigate further.
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3
Submit a formal complaint to your lender Lenders are subject to FCA DISP rules requiring investigation and response within 8 weeks. If the lender rejects your complaint, you may escalate to the Financial Ombudsman Service (FOS) — at no cost.
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4
Check FCA-registered claims services The FCA's Financial Services Register allows consumers to verify that any claims management company they use is properly authorised and regulated.
MotorRedress provides independent guidance and complaint support for affected UK consumers. For more information, visit motorredress.co.uk.
About MotorRedress
MotorRedress is a UK-based consumer information service dedicated to helping motor finance customers understand their rights in connection with PCP and HP mis-selling claims. Our editorial team monitors FCA regulatory developments, court judgments and industry redress schemes to provide accurate, up-to-date guidance for affected consumers.
Website: motorredress.co.uk
Contact: [email protected]