UK car finance compensation scheme delayed until 2027

The Financial Conduct Authority (FCA) has updated the status of its motor‑finance redress programme, which was designed to compensate up to 12.1 million customers for unfair car‑finance agreements. The scheme, valued at around £9.1 billion, faces legal challenges from Consumer Voice and several major lenders, prompting the FCA to partially suspend the framework. Because the Upper Tribunal will not hear the cases until February 2027, the FCA now expects the compensation process to be delayed, with payments unlikely to start before 2027.

FCA chief executive Nikhil Rathi told the Treasury Committee that the regulator wants “compensation to be paid soon” and urged motorists to submit complaints now so a record is created, even if the scheme’s launch is postponed. The original timetable had most claims settled by January 2028, but the delay reflects the complexity of the evidence and the need for a fair outcome for both consumers and finance providers.