How is car finance compensation calculated under the FCA PS26/3 hybrid remedy?

For most eligible agreements, the FCA PS26/3 hybrid remedy averages the estimated APR overcharge (using a 17% APR reduction capped at commission plus interest) and the broker commission paid, then adds simple compensatory interest at the Bank of England base rate plus 1 percentage point.

When does the calculation use full commission repayment instead of the hybrid midpoint?

Where an eligible undisclosed arrangement meets the Johnson high-commission threshold (commission is at least 50% of the total cost of credit and at least 22.5% of the amount borrowed), the calculation uses full commission repayment plus compensatory interest.

What compensatory interest rate is added to car finance refunds?

Under the FCA PS26/3 scheme, simple compensatory interest is calculated at the prevailing Bank of England base rate plus 1 percentage point per year, whereas court claims often reference an 8% simple interest benchmark.

How is car finance redress calculated?

Your estimate depends on the agreement, the remedy that applies and the information available. The published scheme distinguishes the hybrid remedy from commission repayment.

What does the hybrid calculation mean?

The hybrid remedy is the midpoint between the APR-adjustment remedy and the commission-repayment remedy, subject to the applicable caps. It is not the larger of the two figures.

Arithmetic illustration only: if the two remedy amounts were £600 and £1,000, their midpoint would be £800 before any applicable cap. These invented figures explain averaging; they are not an estimate for a particular loan.

See the inputs and results together in our worked calculator examples. If you already have a lender offer, use the offer checklist to compare the figures and assumptions behind it.

When is commission repayment used?

The FCA technical annex describes commission repayment for very-high-commission cases combined with a discretionary commission arrangement or a relevant contractual tie. The full combination of conditions matters; a high commission figure alone does not establish this remedy.

Caps and interest

The scheme applies limits to hybrid redress and includes compensatory interest. The calculation needs more than the original commission amount. Read the individual lines in Redress Breakdown and ask your lender to explain any different inputs or remedy in an offer.

What if I do not know my APR or commission?

This calculator defaults to 12% APR and commission of 8% of the amount borrowed unless you override them. Those are estimates, not lender records. Selecting a typical loan amount uses £10,000. Read the full assumptions and limitations before relying on a result.

Is the court comparison a promised award?

No. The comparison models full commission repayment with a simple-interest assumption. It does not assess the merits, costs, limitation period or likely outcome of court proceedings. Obtain advice about your own circumstances before choosing that route.

Primary source

FCA PS26/3 Technical Annex 1, paragraphs 7.12–7.14 describes remedy selection and the midpoint. The annex models market-wide liabilities; PS26/3 and its accompanying rules are the definitive requirements.

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Last updated: 19 October 2026. This guide is general information, not legal or financial advice.