Compensation
What claimants are typically awarded.
The FCA estimates an average payout of around £829 per successful claimant under the motor finance redress scheme, with the total scheme expected to pay out around £7.5 billion. Your own figure could be a lot lower or significantly higher — the average masks a wide spread.
What drives the amount
Four building blocks determine your individual redress:
Factor 1
Agreement value
How much you financed. Larger agreements typically produced larger commissions and larger interest charges, so redress tends to scale with this.
Factor 2
Commission paid
What the dealer received for placing your finance. Under a discretionary commission arrangement, this could grow with the rate they set.
Factor 3
Interest rate uplift
The gap between the rate you actually paid and the rate you would have paid under a non-discretionary arrangement. This is typically the largest single driver of redress.
Factor 4
Term length
How long the finance ran. The longer the term, the more interest accrued at the inflated rate, increasing the calculated overpayment.
A rough worked example
Suppose you took out a 4-year HP agreement on a £15,000 car. The dealer set the interest rate one percentage point above what they would have offered without the commission incentive. Over four years, that uplift could have cost you several hundred pounds in extra interest — the figure the FCA scheme is designed to refund (often with interest on top).
Illustrative only. Actual redress depends on your specific agreement and the FCA’s confirmed calculation methodology.
Will using a claims firm cost me?
Yes. Regulated claims management companies typically take 15–30% (plus VAT) of any award. On the FCA’s £829 average, that is roughly £125–£300 deducted from your payout. They handle the paperwork in exchange.
You don’t need a CMC to claim. The FCA scheme and the Financial Ombudsman Service are both free to consumers, and the information lenders need is straightforward to provide.
Is the redress taxable?
The refund of overpaid interest itself isn’t taxable, but any interest the lender pays on top of the redress (compensation for the time you were out of pocket) generally is. Lenders may deduct basic-rate tax at source. If you’re a higher-rate taxpayer, you may need to declare it on a Self Assessment.
See if you’re in scope
Two questions, no personal details up front.
Source: FCA PS26/3 (March 2026). General information only. Not legal, financial, or tax advice.