Motor finance compensation faces February 2027 legal hearing
The Financial Conduct Authority (FCA) said on October 13, 2026 that the Upper Tribunal will hear challenges to its motor finance compensation scheme on February 16–26, 2027. The FCA anticipates a judgment in the following months; the scheme remains partially suspended.
Lenders must prepare despite suspension
Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance challenged the scheme, as did Consumer Voice, represented by Courmacs Legal.
The FCA will defend it as the quickest, fairest and most efficient route to compensation.
Firms must keep preparing, progress complaints where possible and comply with rules still in force, including letters to some consumers owed no compensation.
If courts quash all or part of the scheme, there may be neither a scheme nor a complaint-handling pause.
Lenders must plan rigorously for ordinary complaint handling within statutory deadlines, ensure operational and financial readiness, make provisions and engage auditors.
Firms can contact the FCA with questions; it will update its firm web page.
No letter guarantees no payout
Until proceedings conclude, lenders need not calculate or pay scheme compensation.
Some consumers may receive letters saying they are owed nothing; others may hear only after proceedings end.
No letter does not establish entitlement.
Consumers can complain directly to lenders for free; the FCA's claims page explains how and lists contacts.
A law firm or claims management company (CMC) is not required and may charge up to 36 percent of compensation.
Signing up with more than one CMC or law firm risks multiple fees.
Fees warrant close scrutiny
Cancellation fees must be reasonable and reflect work done.
Most claims remain at an early stage, so the FCA urges consumers to check fee demands carefully.
The FCA and other regulators have seen poor practice at some CMCs and law firms; consumers can complain to the firm using the FCA's template letter.