Consumer Voice is bringing a novel legal challenge to alter the way compensation is calculated as part of the FCA’s car finance redress scheme, warning that in its current form it could leave millions of consumers out of pocket by several hundred pounds per claim.

Consumer Voice is set to apply to the Upper Tribunal for a review of the scheme under section 404D of the Financial Services and Markets Act 2000. This will be the first time an FCA redress scheme has been subject to such a challenge.

At the end of March, the Financial Conduct Authority (FCA) published its final rules for its industry-wide motor finance redress scheme. The FCA estimates 12.1 million agreements are eligible, with an average payout of around £830 per consumer, and a total redress pot of £7.5 billion. Consumer Voice supports the need for an industry-wide scheme but believes the scheme, as designed, fails to deliver fair, adequate or lawful consumer redress and systematically under-compensates consumers.

Consumer Voice believes the FCA should give drivers the chance to access a redress scheme that fairly reflects the harm they suffered, with properly calculated compensatory interest.

The FCA has chosen to apply the Supreme Court’s judgment in Johnson v FirstRand as a benchmark for cases which receive full commission redress, but in doing so has excluded the vast majority of consumer complaints from receiving such redress. This is despite the fact the Supreme Court itself explained the Johnson case as having been decided on its own facts. Instead, most consumers will receive redress based on a complex ‘hybrid’ redress calculation that is fundamentally flawed and significantly underestimates the true harm suffered.

Consumer Voice believes consumer redress has been minimised in order to protect lenders in a way which misunderstands and misapplies the FCA’s market integrity objective whilst wrongly minimising the consumer protection objectives of the FCA, which should drive consumer redress schemes.

As part of the challenge the group is recommending that the operation of the Scheme can be commenced, apart from the rules which concern redress, whilst the Tribunal determines this challenge on an expedited basis.

On balance, Consumer Voice believes getting it wrong now would mean underpayment for millions of people to the tune of billions of pounds and raises real concerns that the wrong doers will never be properly held to account.

This challenge is backed by extensive consumer research conducted by Consumer Voice into the scale and impact of the car finance scandal. A 2025 survey of more than 2,000 consumers found widespread gaps in awareness at the point of sale, with only 22% saying they recall commission being explained clearly. Many said they would have made different choices had they known their interest rate was shaped by commission.

For many consumers, inflated car finance costs pushed them into financial strain. Nearly one in five (19%) struggled to pay everyday bills, 13% relied on additional credit, 10% had to borrow from friends or family. In other words, many people were forced to borrow at much higher rates than the base rate just to get by.

Trust in the compensation process is extremely low. Only 22% of consumers say they trust lenders to follow FCA rules when calculating compensation. And just 7% trust them to provide clear, impartial information about the process.

Consumer Voice believes the FCA’s scheme is seriously flawed and fails ordinary motorists. The group is demanding that the FCA withdraw its current proposed rules on redress and interest payments and design a system that delivers genuine justice for the millions of UK motorists who have been victims of historic car finance mis-selling.

Alex Neill, co-founder of consumer rights organisation Consumer Voice, said:

“We are taking this unprecedented step to challenge the regulator’s redress scheme because it doesn’t deliver fair or lawful compensation for drivers. We support a redress scheme being put in place, but as it stands millions of people will be under-compensated, and the lenders involved in this scandal won’t be meaningfully held to account.

“The FCA has designed a scheme that leaves ordinary motorists hundreds of pounds per claim out of pocket. That cannot be left unchallenged.”

“The FCA has treated the Supreme Court’s judgment in Johnson as a rigid benchmark in order to exclude most consumers from receiving full commission redress, even though the Court itself acknowledged it was a fact sensitive decision. Its methodology relies on APR benchmarks that underestimate the real harm people suffered, and its interest calculations fall hardest on those who could least afford to be overcharged in the first place."

“Consumers have been let down by the lenders who mis-sold them car finance. They should not be let down again by the regulator that is meant to protect them. The FCA must fix the scheme and deliver the fair redress that millions of UK motorists are owed.”

To find out more about the challenge visit the Consumer Voice website: [https://consumervoice.uk/rights/car-finance-compensation]

Notes to editors

About Consumer Voice

Consumer Voice is free to use, independent and we tell consumers when the companies they buy from have broken the law. We help people easily work out whether they’re entitled to compensation and how to claim.

Alex Neill and Nikki Stopford co-founded Consumer Voice in 2023. They are consumer rights experts and have over 20 years’ experience of advocating and raising industry standards for consumers.

About the legal challenge

On 30 March 2026, the Financial Conduct Authority (FCA) published Policy Statement PS26/3, setting out the final rules for its industry-wide motor finance redress scheme. The scheme covers regulated motor finance agreements entered into between 6 April 2007 and 1 November 2024 where commission was paid to a credit broker. It has been split into two separate schemes: Scheme 1, covering agreements from 2007 to 31 March 2014, and Scheme 2, covering agreements from 1 April 2014 to 1 November 2024. The FCA estimates 12.1 million agreements are eligible, with an average payout of around £830 per consumer, and a total redress pot of £7.5 billion.

Consumer Voice is being represented on a pro bono basis by Courmacs Legal, a specialist consumer law firm that represents 1.6 million motor finance claimants. The proposed challenge will be brought in the Upper Tribunal (Tax and Chancery Chamber) under section 404D of the Financial Services and Markets Act 2000.

About Consumer Voice’s car finance research

Consumer Voice conducted a survey of 2,021 members of the public who had taken out a car finance agreement between 2007 and 2024. The majority had taken out at least one agreement during 2007-2021, the key period under review. Fieldwork took place online between 27 October and 9 November 2025. The results formed the basis of their response to the FCA consultation on motor finance redress.

For more details go here: https://consumervoice.uk/cars/financial-regulator-must-put-consumers-first-in-car-finance-redress-scheme

Further in-depth research from Consumer Voice can be found here:

[https://consumervoice.uk/cars/car-finance-scandal-those-hit-hardest-risk-losing-out-again] (30 March 2026)

[https://consumervoice.uk/cars/car-finance-whats-next-for-consumers-in-2026] (1 January 2026)

[https://consumervoice.uk/cars/car-finance-the-incentives-dealers-dont-want-to-tell-you-about] (28 March 2025)

[https://consumervoice.uk/cars/car-finance-what-consumers-want] (21 March 2025)

[https://consumervoice.uk/cars/car-finance-dealer-trust-broken-as-compensation-nears] (14 March 2025)

[https://consumervoice.uk/cars/car-finance-customers-kept-in-the-dark-over-secret-commissions] (20 January 2025)

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