On October 13, 2026, the Financial Conduct Authority confirmed that the legal challenges to its motor finance compensation scheme will be heard by the Upper Tribunal between 16 and 26 February 2027, with a judgment expected in the following months. Until the legal process concludes, lenders do not need to calculate or pay compensation under the scheme.
The scheme is currently partially suspended. The scale is enormous: the FCA estimates 12.1 million motor finance agreements are eligible for compensation — people whose car finance arrangements involved commission payments to brokers that were not properly disclosed.
None of that changes what you should do today. Read on.
The challenge was brought by three lenders — Volkswagen Financial Services, Mercedes Benz Financial Services, and Crédit Agricole Auto Finance — and by Consumer Voice, a consumer group represented by Courmacs Legal, which argues the scheme shortchanges motorists. The FCA says it will defend the scheme robustly as lawful and the quickest, fairest way to compensate consumers.
Meanwhile, the FCA's order to firms is clear: keep preparing for the scheme and progress complaints as far as possible, even while the payout machinery is paused.
This is the part the freeze doesn't touch:
The FCA's advice for consumers is blunt:
Anyone asking for upfront payment to "secure" your compensation, or cold-calling with promises about your payout, is someone the FCA just warned you about. The scheme itself is free.
Not until the legal process concludes. The Upper Tribunal hears the challenges on 16–26 February 2027, with judgment expected in the following months. Until then, lenders do not need to calculate or pay compensation under the scheme.
No. If you are concerned about your car finance agreement and have not yet complained, you can complain directly to your lender for free. The FCA's claims page explains how and provides lenders' contact details.
The FCA says you do not need one — a law firm or CMC may charge up to 36% of any compensation, and signing with more than one can mean multiple fees. You can complain directly to your lender for free.
It is a possibility the FCA itself flags: it has told firms to plan for the scenario that, if the scheme or parts of it are quashed, there may be no motor finance compensation scheme and no complaint-handling pause. That is exactly why firms must keep progressing complaints now — and why your free complaint to your lender still matters.
Sources (verified October 22, 2026): Financial Conduct Authority, statement "Motor finance legal challenge to be heard in February 2027" (published 13/10/2026), https://www.fca.org.uk/news/statements/motor-finance-legal-challenge-be-heard-february-2027; FCA, "FCA confirms motor finance redress scheme" (12.1m agreements eligible), https://www.fca.org.uk/news/statements/fca-confirms-motor-finance-redress-scheme.
