FCA car finance investigation: the timeline

The FCA’s car finance investigation runs from its ban on discretionary commission in January 2021, through its review of past agreements from January 2024 and the Supreme Court ruling of 1 August 2025, to a compensation scheme confirmed on 30 March 2026. Parts of that scheme are now suspended by the Upper Tribunal, and the FCA expects payments to start in 2027 if it is upheld. This article was first written in February 2026. Here is how we got here.

Update, 3 October 2026: The FCA published its final rules on 30 March 2026 (policy statement PS26/3). The scheme covers agreements from 6 April 2007 to 1 November 2024, with an estimated 12.1 million eligible agreements, an average payout of around £830 and about £7.5 billion in total. Four parties then challenged it at the Upper Tribunal. On 2 July 2026 the FCA confirmed the Tribunal had suspended the parts of the scheme that require lenders to calculate and pay compensation. The FCA confirmed on 13 October 2026 that the challenges will be heard on 16–26 February 2027. If the scheme is upheld and not appealed, the FCA expects payments to start in 2027.

January 2021: discretionary commission banned

In July 2020 the FCA announced a ban on discretionary commission arrangements, which let a dealer or broker set the customer’s interest rate and earn more commission by setting it higher. The ban took effect on 28 January 2021. It did not, at the time, deal with compensation for past agreements.

January 2024: the review and the complaints pause

On 11 January 2024 the FCA said it would review historical motor finance commission arrangements across several firms. It also paused the usual eight-week deadline for lenders to give a final response to complaints about discretionary commission. That pause has since been extended several times.

October 2024: the Court of Appeal

On 25 October 2024 the Court of Appeal ruled in three cases, Johnson, Wrench and Hopcraft, that dealers could not receive commission from lenders unless it had been disclosed to the customer and they had given informed consent. The lenders appealed. In December 2024 the FCA extended the complaints pause to cover other types of commission too.

April to August 2025: the Supreme Court

The Supreme Court heard the appeals on 1 to 3 April 2025 and gave judgment on 1 August 2025 (see the Supreme Court car finance ruling explained). It largely sided with the lenders on the wider legal duties, overturning much of the Court of Appeal’s reasoning. But it found that one customer, Marcus Johnson, had an unfair relationship with his lender under consumer credit law and awarded him the commission plus interest.

On 3 August 2025 the FCA said it would consult on an industry-wide compensation scheme covering agreements back to 2007.

October to December 2025: the consultation

The FCA published its proposals on 7 October 2025. It estimated that 14.2 million agreements involved inadequate disclosure, with an average payout of around £700 per agreement and £8.2 billion in total redress. On 5 November it said final rules would follow in February or March 2026. On 3 December it confirmed that the complaints pause would lift on 31 May 2026.

What happens next

As of February 2026, the next step is the FCA’s final policy statement. The FCA has said compensation should be paid in 2026 once the rules are in place. Lenders are expected to contact customers who are likely to be owed money, as well as dealing with complaints already made.

The figures in the final rules may differ from the consultation estimates.

Where tax fits in

Compensation under the scheme is made up of the commission or estimated loss plus interest. That interest is taxed as savings income, and lenders usually deduct basic-rate income tax (22% from 6 April 2027) before paying it. Whether you can get it back depends on your income in the tax year you are paid. Non-taxpayers can usually reclaim all of it, and basic-rate taxpayers up to £200, though individual circumstances vary.

The tax is usually reclaimed from HMRC on form R40, or through Self Assessment for people who file a return. There is a four-year time limit from the end of the tax year of payment. Our how it works page explains how we check your position and make the claim for you.

Next step

If you are waiting on a compensation decision, there is nothing to do on the tax side yet. Once you are paid, our calculator shows roughly how much of the deducted tax you might reclaim.