UK FCA delays £7.5bn motor finance compensation scheme after legal challenges

The Financial Conduct Authority (FCA) has partially suspended its industry‑wide motor‑finance redress programme, which was designed to compensate consumers mistreated under car‑finance agreements between 2007 and 2024. The pause follows four legal challenges – one from consumer group Consumer Voice and three from lenders Volkswagen Financial Services, Mercedes‑Benz Financial Services and Crédit Agricole Auto Finance – questioning the scheme’s scope and methodology.

Because of the litigation, lenders are no longer required to calculate or pay compensation until the Upper Tribunal reaches a decision, expected either in December 2026 or February 2027. If the scheme is upheld and not further appealed, the FCA expects payouts to begin in 2027, delaying the £7.5 billion payout that millions of UK motorists were awaiting.