Upper Tribunal order partially suspends FCA motor finance consumer redress scheme

In a statement published on Thursday, 2 July 2026, the Financial Conduct Authority (FCA) confirmed that the Upper Tribunal would hear the legal challenges to its motor finance consumer redress scheme either on 14-18 December 2026 or 16-26 February 2027, with a judgment expected in the months that follow.

The regulator said that the final dates will depend on whether the challengers to the scheme—Consumer Voice, represented by Courmacs Legal, on behalf of consumers; and three lenders: Mercedes-Benz Financial Services, Volkswagen Financial Services and Crédit Agricole Auto Finance—apply for further expert opinion or disclosure of information, and whether any such applications succeed.

The FCA also confirmed that the Tribunal has made an order suspending parts of the scheme on terms agreed with the regulator and the four challengers.

What does the suspension mean for the scheme?

The regulator stressed that the suspension does not mean that lenders should stop preparing for the scheme to the contrary, they should continue to progress complaints as far as possible.

The FCA noted, however, that the suspension confirms that even if the scheme is upheld, redress payments will not begin until at least 2027. There remains the potential for further delays should the Upper Tribunal's ruling be appealed.

In the event that its redress scheme is overturned in whole or in part, the regulator said it would need to decide what to do next. In a statement published on 8 May 2026, the FCA stated that it would not immediately consult on new redress rules, and cautioned in its latest statement that, should the scheme be overturned, it may tell lenders to resolve complaints under the usual statutory complaints process, meaning that they would need to respond to consumers within eight weeks. The regulator reiterated that it believes a compensation scheme is the simplest and most efficient way for consumers to receive redress and for lenders to put matters right, and warned that were it to consult on a revised scheme, this could face similar challenges and ultimately delay a resolution and compensation payments until 2028 or beyond.

What happens next?

While redress payments remain delayed, lenders must continue to review complaints. They will need to inform consumers who have complained if they are not owed compensation under the scheme, unless:

• they consider the complaint to be out of time; or
• a complaint is about a contractual tie, and the lender says there were visible links between the lender, manufacturer, and franchised dealer.

These exceptions apply as both are elements subject to challenge.

The FCA has also provided a timeline for lenders to inform consumers if they are not owed compensation under the scheme.

• Consumers with agreements that began on or after 1 April 2014 and complained before 30 June 2026 should hear from their lender by 18 November 2026.
• Consumers with agreements that began before 1 April 2014 and complained before 31 August 2026 should hear from their lender by 18 January 2027.

Consumers who complain after these dates should hear from their lender(s) within five months.

These deadlines apply only if lenders believe consumers are not eligible for compensation under the scheme; however, we must caution that not hearing from a lender does not guarantee redress will be paid. You should not take silence as an indication or guarantee that you will be eligible for compensation.

Consumers retain escalation rights as detailed in the final scheme rules

Consumers who receive a communication from their lender detailing they are not owed compensation under the scheme retain the right to:

• ask their lender to review its decision;
• refer the complaint to the Financial Ombudsman Service if they are still unhappy; and
• consider whether to pursue a claim through the courts.

For complaints that cover both in- and out-of-scope issues, lenders should tell consumers if they are not owed compensation for the in-scope elements, in line with the outlined rules.

Do I need to use a law firm or claims management company to bring a claim?

No. The FCA redress scheme, should it proceed, will be free to use and enable consumers to claim any compensation they are owed at no cost. The regulator continues to encourage consumers to complain directly to their lender if they have not already done so.

Given the broad range of issues that may have arisen during a motor finance transaction and the ongoing delays with the redress scheme, there are several potential benefits to instructing a solicitor to manage your claim, as detailed in this guide.

Register your claim with Harcus Parker

If you have yet to bring a motor finance complaint and wish to benefit from professional representation to ensure your lender response and any redress calculation can be correctly verified and, if necessary, challenged, you can register your claim with Harcus Parker here.