You’ve probably seen the headlines about the Financial Conduct Authority (FCA) looking into car finance deals and setting up a redress scheme for customers who may have overpaid due to excess or hidden commissions charged by lenders/retailers.
With millions of agreements potentially affected, one question is on everyone’s mind: “Do I qualify for a payout?”
In this blog, we’ll explain what the FCA redress scheme is about, outline what types of agreements are in scope, clarify whether PCH lease agreements are covered, and point you towards trusted places to find the latest information.
Lease cars are not included: Personal Contract Hire is a lease or consumer hire agreement and not a credit agreement, and therefore does not involve interest payments or linked commission structures that are central to the redress scheme.
Interest-free finance or agreements with a genuine 0% interest rate are unlikely to be eligible for redress, even if an ‘unfair relationship’ existed. Limited companies are also out of the scope of the scheme.
The FCA is currently consulting on a motor finance redress scheme for customers who were treated unfairly on certain types of car finance agreements.
In simple terms, it’s looking at cases where customers may have paid more than they should have because of the way commission structures were arranged between lenders and brokers.
It focuses on finance credit agreements used to buy a car, van or motorbike between 6 April 2007 and 1 November 2024. These typically include agreements where the user can take ownership of the vehicle at the end of the contract, for example:
- Personal Contract Purchase (PCP) agreements
- Hire Purchase (HP) agreements
- Conditional Sale agreements
One or more of the following criterion will generally exist in order to be covered by the scheme:
- The use of discretionary commission arrangements, where dealers increased the interest rate you paid, and in return, increased their commission, leading to undisclosed and unfair price hikes for the customer.
- High commission arrangements, where commission was equal to or greater than 35% of the total charge for credit and 10% of the total loan amount and where ‘unfair relationships’ existed, for example, contractual ties and agreements where the broker had an undisclosed and exclusive relationship with a lender.
Status of the scheme: The FCA’s redress scheme is still at the consultation stage, and the final rules, exact scope, and timings may change. Always refer to the FCA’s website for the correct information.
The key question for car leasing customers is whether their PCH lease is covered by the redress scheme.
The answer is no. PCH is a Consumer Hire Agreement and not a Credit Agreement, and the proposed scheme is focused on regulated motor finance credit agreements, not Consumer Hire or Rental Agreements. Here’s why PCH sits outside of the scheme’s scope:
- You were leasing/renting the vehicle, not borrowing money to buy it.
- No commission linked to credit cost (known as discretionary commission) was involved.
- The commission paid is not considered ‘high’.
- As a result you would not be eligible for compensation under the current scheme.
Legally, PCH is treated as a Consumer Hire Agreement, which is defined separately from credit agreements under the Consumer Credit Act 1974.
Putting it plainly:
PCP / HP | Personal Contract Hire (PCH) |
|---|---|
You're financing the purchase of the car | You’re renting the car for a fixed term |
There's a loan element and interest | You give it back at the end |
You’re paying for its use, not ownership |
“The crucial thing is to understand what type of agreement you’ve got. If it’s a Personal Contract Hire lease, you’re paying to use the vehicle, not own it. The FCA’s proposed redress scheme is centred on credit agreements, and therefore, PCH leasing doesn’t qualify.”
Even if you’re fairly sure your deal is (or was) a PCH lease, it’s still worth double-checking your paperwork to know where you stand.
- Check the type of agreement - find your original documentation or log into your online account and check the wording.
- Read any communication from your lender - many lenders and brokers are sending updates to customers about how they’re handling the FCA review. They often explain how they’re dealing with complaints, whether your agreement is involved, and how the temporary complaint-handling rules apply to them.
- Use official FCA resources for the latest information - For up-to-date information, always go to the FCA’s website. The pages are regularly updated as the consultation stage progresses.
- Be wary of cold calls and claims companies - Whenever there’s a potential redress scheme, unsolicited calls and messages tend to appear. Be cautious of cold calls, texts, or messages about compensation and don’t share personal or banking details with anyone who contacts you out of the blue.
- Still unsure? Talk to your provider - If you’re leasing through Nationwide Vehicle Contracts, get in touch and we’ll be happy to help. We can help confirm what type of agreement you have, help you understand your contract, and point you in the right direction for further resources.
We remain committed to transparency and fair treatment of our customers.
If you have any further questions or would like additional clarification, please don’t hesitate to contact us and we would be happy to investigate your position thoroughly.
Originally posted: 4th December 2025
