Important Updates on the FCA’s Motor Finance Review
Update as of 2 July 2026
On 2 July 2026, the FCA announced that certain elements of its motor finance compensation scheme have been suspended pending the outcome of a legal challenge. The FCA has made clear that firms must continue to comply with all aspects of the scheme that have not been affected by the suspension.
The Upper Tribunal is expected to hear the challenge in either December 2026 or February 2027. Until the legal process has concluded, firms are not required to carry out compensation assessments or make compensation payments under the FCA’s scheme.
The FCA has produced a consumer factsheet which can be accessed by clicking here.
If you already have an open complaint
If you have previously contacted us regarding motor finance commission arrangements and we have not confirmed that your complaint is closed, your case remains under review.
You do not need to do anything at this stage. We will contact you if we require any additional information or when we are able to provide a further update.
If you have not yet made a complaint
You can still submit a complaint to us by emailing customercare@smfmotor.com.
However, you do not need to make a complaint in order to be considered for any redress that may be available through the FCA’s scheme.
What this means for compensation
No decision has yet been made on whether compensation will be payable in individual cases. As a result of the legal challenge, firms are currently not required to calculate or pay compensation under the FCA’s motor finance redress scheme.
Once the outcome of the Tribunal proceedings is known, we will act in line with the FCA’s requirements and provide further updates. If the outcome affects how your complaint should be handled, we will explain what this means and outline any next steps.
Update as of 28th April 2026
The FCA has published its final rules for the motor finance compensation scheme in policy statement PS26/3. It confirms that the scheme will come into force on 31 March 2026, known as the ‘Scheme effective date’. After this date, there will be a short implementation period to allow firms time to prepare:
- Until 30 June 2026 for agreements taken out from 1 April 2014
- Until 31 August 2026 for agreements taken out before this date
We have been preparing for the introduction of the compensation scheme and will be reviewing the policy statement in detail to ensure our approach aligns fully with the final FCA rules
We can confirm that we have never used any form of Discretionary Commission Arrangement and have never allowed the broker to influence the interest rate for any potential customer.
We can confirm that we will be contacting customers (or their representatives) and providing updates in accordance with the FCA’s expected timescales.
Claims Management Companies
The Financial Conduct Authority (FCA) has said:
“We aim to make any redress scheme easy to take part in without needing a claims management company (CMC) or law firm. Using a CMC or law firm could mean you pay up to 30% of any compensation you receive in fees.”
Under the redress scheme rules, lenders must contact all customers who may be eligible for a payment as soon as possible. Using a claims management company will not speed up this process or improve your chances of receiving redress.
If you have already instructed a claims management company to act for you, please be careful before signing up with any additional claim firms. You should always check the terms of your existing agreement first, as you may have to pay cancellation or exit fees if you end your contract after the cooling off period.
The FCA and the Solicitors Regulation Authority (SRA) have recently issued a joint warning to claims management companies about the problems caused when multiple firms represent the same customer. You can find further information here.
If you would like to make a complaint about motor finance commission, you can contact us directly, there is no need to use a claims management company.