FCA Motor finance redress scheme: What it means for businesses

In October 2025, the Financial Conduct Authority (FCA) confirmed plans for an industry-wide redress scheme for customers who overpaid for motor finance because of unfair or undisclosed commission arrangements. This follows years of legal action and investigation into how car dealers and finance providers set interest rates under “discretionary commission” models.

While this could lead to significant compensation for individual consumers, the situation regarding businesses that used motor finance is more complicated. 

Consumer protection is built on the premise of a power imbalance between an individual consumer and a commercial business. These laws are not intended to apply when both parties are businesses, who are assumed to have more equal footing and commercial knowledge. However, business owners should still be aware of this scheme because:

1. Individual directors or business owners may be eligible if they have purchased a vehicle for personal use only

2. There may be a future legal class action by business organisations or a competition authority

3. It highlights the importance that all finance agreements should be arranged using trusted providers that are FCA regulated, such as the Capitalise platform, so that you can be sure that commission is fair and transparent.

The FCA proposals for compensation for consumers

The FCA’s review found that between 2007 and 2021, some dealers were allowed to adjust the interest rate on car finance deals and take a higher commission for charging more. This practice was banned in 2021, but millions of historic agreements may have cost borrowers more than necessary.

The regulator has proposed a redress scheme and is seeking views from the motor and finance industry, plus consumers and consumer organisations. It expresses a desire for motor finance companies to start making compensation payments in 2026. 

Whilst the final points of this scheme are being confirmed, FCA encourages all potentially affected consumers, with hire purchase agreements or personal contract purchase plans (but not personal contract hire) taken out between 6 April 2007 and 1 November 2024, to make a complaint to the motor finance lender where payments were made. More details, including a template letter, are on its website here. 

Can businesses make a claim?

The FCA does not define what a ‘consumer’ is in this specific context. More details may be provided when the final scheme is announced. However, Given that the scheme is repeatedly called a consumer redress scheme, it is highly likely that the FCA will use the ordinary regulatory meaning of “consumer” (natural persons acting outside business purposes) or a similar scheme-specific definition that excludes commercial finance.

The absence of any mention of businesses (unincorporated or corporate) suggests the FCA does not intend to treat companies as “motor finance customers” under the scheme.

It is likely that any business (even a small sole trader) would need to show that the vehicle finance was contracted in a personal use context, not in a purely business capacity, to fall within the redress scheme’s scope, if allowed at all. If the finance was taken out for business purposes, it is unlikely to fall within the definition of a “consumer motor finance customer”, even if you are a sole trader or partnership. Limited company borrowers are not classed as consumers under FCA rules, regardless of size and there is no company-size threshold or exception for small businesses.

What businesses should do now

Here are some steps you can take now as a business owner:

1. Review your finance history and documentation -  Identify any vehicle loans or hire purchase agreements taken out between 6 April 2007 and 1 November 2024 and collate any agreements, emails and payment records showing how the agreement was structured and sold. You can make a complaint to your lender if you believe that the vehicle was for personal use

2. Watch the FCA consultation outcome - The final rules, expected early 2026, will confirm eligibility and payment processes. There may be a definition of ‘consumer’ or a mention of small businesses which broadens the scope. 

3. Consider private action if excluded from the FCA scheme - If your business believes it paid excessive interest due to undisclosed commissions, legal advice may help explore a separate contractual or mis-selling claim, although that route is slower and less certain. There may be further class actions on behalf of companies. 

4. Work with trusted lenders and intermediaries - This issue has raised awareness that some finance brokers and lenders can be unscrupulous. Whilst consumers have some protections, small businesses have far fewer rights. Capitalise was founded on the basis of democratising the UK lending landscape for businesses, so that it was more equal and fair. You can be sure that when you work with Capitalise, you are dealing with a company and team members who will always ‘do the right thing’ for your business. 

The FCA’s redress scheme marks an important move toward fairer finance practices, though it’s likely to focus on consumers rather than businesses. Small business owners should still review their finance agreements and stay informed as the scheme develops. At Capitalise, we’re committed to ensuring every business has access to transparent, fair, and responsible finance.