14th October 2026
The Financial Conduct Authority (FCA) has confirmed that legal challenges to its £9.1 billion car finance compensation scheme will be heard by the Upper Tribunal between 16 and 26 February 2027. The delay means motorists will have to wait longer to discover whether they are entitled to compensation and how much they might receive.
The scheme covers potentially mis-sold car finance agreements dating from April 2007 to November 2024, where commission arrangements were not properly disclosed to customers.
Three lenders — Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance — are challenging the scheme. Consumer group Consumer Voice is also bringing a legal challenge.
The FCA intends to defend the scheme, arguing that it offers the quickest and fairest way to compensate affected motorists. The overall cost to lenders is estimated at £9.1 billion, including around £7.5 billion in compensation.
Parts of the scheme remain suspended while the legal challenges proceed. Lenders must continue preparatory work and deal with complaints as far as possible, but they do not have to calculate or pay compensation under the scheme until the legal process concludes. A judgment is expected in the months following the hearing.
The outcome remains uncertain. If the challenges succeed, the scheme could be overturned in whole or in part, potentially requiring a different approach to complaints and compensation.
The FCA advises motorists who believe they may have been affected to complain directly to their lender for free rather than automatically paying a claims management company or solicitor. Claims firms may charge up to 36% of any compensation, and customers should check the terms carefully before signing an agreement.
The bottom line: millions of motorists may be affected, but compensation is now unlikely to be resolved quickly. The February hearing is the next major milestone, although further delays remain possible.
Read the full story and see links for advice at
https://www.fca.org.uk/news/statements/motor-finance-legal-challenge-be-heard-february-2027