FCA confirms complaints pause will end on 31 May 2026

The Financial Conduct Authority (FCA) confirmed on 3 December 2025 that the pause on firms handling motor finance complaints will end on 31 May 2026¹. The pause, first announced in January 2024 for complaints about discretionary commission arrangements (DCAs), was extended in September 2024 and again in December 2025, allowing firms until after 31 May 2026 to respond to these complaints². In December 2024 the FCA further extended the pause to include complaints involving non-discretionary commission arrangements², and in December 2025 it excluded complaints where the vehicle is leased².

Complaints that were previously paused will now move across to be dealt with under the FCA's motor finance redress scheme². The FCA announced the full plan for the scheme on 30 March 2026, having made several changes after feedback from consumers, firms and industry bodies through its 2025 consultation¹. Fewer agreements qualified for compensation, with around 12.1m expected to be eligible, down from 14.2m, while the average compensation increased for older agreements and a minimum interest rate of 3% a year was added to payouts¹. The FCA says the average payout is likely to be around £829¹. Overall, the FCA estimates the scheme could cost around £7.5bn if 75% of eligible customers make a claim¹.

Car finance loans taken out between 6 April 2007 and 1 November 2024 are covered by the scheme if the borrower was not clearly told that their dealer or broker was allowed to set a higher interest rate to earn a bigger commission, that the commission was at least 10% of the loan or 39% of the total cost of credit, or that the dealer only worked with one specific lender¹. Claims for high-value loans, meaning amounts higher than 99.5% of other loans that year, are not covered¹. Borrowers may not be eligible if the commission was £120 or less for agreements beginning before 1 April 2014 and £150 or less from that date, if the DCA was not used to earn discretionary commission, or if they were not charged interest¹.

Compensation for most people has two parts: a refund of the commission paid, and an amount for estimated loss, which is 17% of the interest paid for cases from April 2014, or 21% for loans made before that date¹. Interest is also paid on compensation, based on the annual average Bank of England base rate per year, plus 1%, at a minimum of 3% in any year¹. The FCA has said compensation will not put claimants in a better position than if they had been treated fairly, so some payments will be capped, with around one in three cases affected¹.

On 1 May 2026 the FCA confirmed it had received legal challenges against its compensation scheme from Consumer Voice (a limited company), represented by Courmacs Legal Ltd, and three from lenders: Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance¹. Aldermore Bank and MotoNovo Finance both state that the FCA has suspended the timescales in the Motor Finance Consumer Redress Scheme for contacting customers whose agreements are likely to qualify for redress, to allow time for a legal challenge to be heard in December 2026 or February 2027². Both lenders state they are not required to calculate or pay redress, or send communications about compensation owed under the scheme, while the suspension remains in place².

Why it matters for households

The end of the pause means firms will be able to respond to motor finance commission complaints again from 31 May 2026, after a period in which they were not required to do so¹. Complaints that were paused move across to be dealt with under the redress scheme². Borrowers who have already complained do not need to do anything for now, according to the FCA, and lenders were set to contact eligible customers directly, usually by email or other digital channels, provided proper fraud checks were in place¹. Aldermore and MotoNovo both say existing complaints remain open and that they are starting to contact customers whose agreements will not qualify for redress².

The scheme covers agreements from 6 April 2007 to 1 November 2024¹. The FCA estimates around 12.1m agreements are eligible, down from 14.2m under earlier plans, and that the average payout is likely to be around £829¹. Some payments will be capped, with around one in three cases affected¹. The FCA has said that using a claims management company means giving part of any payout to that firm, potentially as much as 30% of an award¹. Complaints can still be made directly to lenders at no cost².

What happens next

The FCA confirmed on 1 May 2026 that legal challenges to the scheme have been launched by Consumer Voice and three lenders¹. Aldermore and MotoNovo state the suspension of scheme timescales is to allow a legal challenge to be heard in December 2026 or February 2027². Under the current plan, borrowers not contacted during the preparation period have until 31 August 2027 to make a claim, with a deadline of 30 June 2026 for loans taken out from 1 April 2014¹. Once the preparation period ends, lenders have three months to tell borrowers if they are owed money and how much they will get, or six months after the preparation period ends under a later change¹.