- What’s happening: The FCA has restarted the complaints clock for leasing agreements while extending the pause on credit complaints until May 2026.
- Why it matters: The split approach clears simpler cases now and prepares firms for a mass redress scheme covering millions of potentially mis-sold credit agreements.
- What’s next: Lenders must process leasing complaints immediately while awaiting final rules for the credit redress scheme expected early next year.
For millions of British drivers who financed cars over the past decade, the question of whether they were mis-sold has hung in regulatory limbo since January 2024.
Lenders have been unable to process complaints. Consumers have been unable to get answers. And regulators have been waiting for the courts to clarify what, exactly, constitutes an unfair deal.
Now that limbo partially lifts – but only for some.
In a move that reveals much about how modern regulators manage mass-scale consumer redress, the Financial Conduct Authority (FCA) has effectively split the motor finance scandal in two. The complaints clock now restarts for leasing agreements, while the far larger question of hidden commissions on car loans remains frozen until May 2026.
The bifurcation is more than administrative housekeeping. Faced with potential liabilities of £8 billion and millions of affected agreements, the FCA has chosen surgical precision over comprehensive delay. It is clearing the decks of the simpler cases now to prevent operational paralysis when the main redress scheme launches next year.
The leasing carve-out
The decision to restart the clock on leasing complaints is driven by legal nuance rather than consumer demand. The scandal centres on the “unfair relationship” provisions of the Consumer Credit Act 1974, which the Supreme Court examined in its landmark judgment in Johnson v FirstRand Bank last August.
Pure leasing agreements – specifically Personal Contract Hire (PCH) – are generally hire agreements, not credit agreements. They do not typically fall under the same provisions that trigger the “unfair relationship” test regarding undisclosed commissions. Consequently, as detailed in Policy Statement 25/18, the FCA has determined that leasing complaints cannot be bundled into the forthcoming industry-wide Consumer Redress Scheme.
This creates an immediate operational hazard for lenders. Firms have been stockpiling leasing complaints alongside credit complaints since the pause began. As of now, the eight-week statutory deadline for responding resumes. If a firm had used two weeks of that time before the pause was imposed, they now have six weeks remaining to issue a Final Response Letter.
The regulator’s intent is straightforward: clear the decks. By forcing firms to process leasing complaints via the standard dispute resolution mechanism now, the FCA is preventing the Financial Ombudsman Service (FOS) from being overwhelmed by a second wave of leasing cases arriving simultaneously with the primary redress scheme next year.
A tighter timeline for the main event
While leasing complaints are being pushed out the door, the timeline for the primary scandal – involving Personal Contract Purchase (PCP) and Hire Purchase (HP) – has been tightened.
The FCA had previously consulted on extending the pause for these complaints until July 2026. In PS25/18, however, the regulator settled on a shorter deadline: 31 May 2026. This two-month reduction suggests confidence that the complex rules for the Consumer Redress Scheme, currently under consultation, will be finalised and published by February or March.
The logic is one of containment. The Redress Scheme is designed to be a single point of entry for millions of consumers, offering a calculated payout formula for hidden commissions without the need for individual litigation. By setting a firm May deadline, the FCA is putting the industry on notice: the mechanism for mass payouts will be ready, and the era of indefinite delay is over.
The shadow of the Supreme Court
This segmentation strategy is the direct downstream consequence of judicial turbulence that characterised 2024 and 2025. The Court of Appeal’s October 2024 ruling initially suggested that a fiduciary duty existed between brokers and borrowers – a standard that would have rendered almost every car loan sold in the last decade illegal.
The Supreme Court’s August 2025 intervention dialled this back. While it upheld the finding of an unfair relationship in Johnson (where the commission was hidden), the court stopped short of declaring a universal fiduciary duty. This nuanced victory for lenders paradoxically cemented the need for a redress scheme. It confirmed liability for hidden commissions but narrowed the scope enough that a calculated redress formula became viable.
However, the judgment’s specificity meant that adjacent products – like leasing – were left legally distinct. The FCA’s move reflects an acceptance that a one-size-fits-all redress scheme is legally vulnerable. A scheme that included leasing agreements might have been challenged by lenders via judicial review on the grounds that it exceeded the court’s precedent.
What this means for regulators
The FCA’s handling of PS25/18 demonstrates a maturation in how modern regulators handle mass consumer redress. In the payment protection insurance era, the approach was often reactive, leading to a decade of claims management chaos and inconsistent ombudsman decisions.
Here, the FCA is attempting to impose order through segmentation. By stripping out the leasing cohort now, the regulator reduces the complexity of the main Redress Scheme when it launches. The message to firms is clear: deal with the simpler hire disputes now, manually, so you are ready to process millions of credit disputes through the automated scheme in May.
The reprieve is over. For leasing, business as usual resumes. For the wider credit market, the machinery of mass remediation is being assembled, and the launch date is now fixed.
For British drivers still waiting to learn whether they were mis-sold, the timeline is finally clear – though whether the eventual redress will feel adequate remains to be seen.
