The Financial Conduct Authority's motor finance compensation scheme, finalised in March 2026, is now facing legal challenges that are expected to delay payouts until at least November this year. Here is what has happened and what it means if you have a claim with us.
What the FCA announced
On 8 May 2026, the FCA published a statement setting out its position following four separate legal challenges to its redress scheme.
The first came from a law firm acting alongside consumer rights group Consumer Voice, which applied to the Upper Tribunal to challenge the way compensation is calculated under the scheme. Three lenders then submitted their own challenges: Mercedes-Benz Financial Services, Volkswagen Financial Services, and Crédit Agricole Auto Finance. All four challenges argue that the scheme's rules are unlawful and are asking the Upper Tribunal to quash them.
The FCA has confirmed it will defend the scheme robustly and considers it the quickest and most effective way to resolve what it describes as a widespread and long-running issue.
Why offers are now delayed
The original scheme required lenders to begin contacting affected customers from the end of June 2026. Those timelines cannot now be met while the legal process runs its course.
There are a number of stages these challenges need to go through before they are finally resolved, and this process may take several months. Hearings are unlikely to take place before October 2026, and on a precautionary basis the FCA has told lenders to plan for a potential Tribunal decision in mid-November 2026. This means the earliest that compensation offers are likely to be made is November 2026.
In the meantime, the FCA has confirmed there will be no further extension of the complaints pause, and that lenders have adequate time between now and mid-November to prepare responses to complaints already received. Lenders have been told to continue preparation work so they are ready to move quickly once the challenges are resolved.
Could the scheme itself change?
It is possible. The challenges cover several aspects of the scheme, including how redress is calculated, the approach to estimating consumer losses, and how the FCA has applied its statutory objectives. Depending on the outcome, the FCA may need to amend how redress is calculated or who qualifies.
What this means for your claim
The delay is disappointing, and we understand that many people were expecting to hear from lenders later this year. The FCA remains committed to securing redress for affected consumers and has instructed lenders to continue preparing so they are ready to act once the challenges are complete.
You do not need to take any action. We are monitoring developments closely and will contact you as soon as there is a meaningful update that affects your claim. If the outcome of the challenges changes the timelines or how redress is calculated, we will write to you with a clear explanation of what that means.