Overview
- The FCA announced Thursday that the Upper Tribunal has ordered a partial suspension of its industry‑wide motor finance redress scheme so lenders do not have to calculate or pay compensation while legal challenges proceed.
- The Tribunal will hear four challenges from Consumer Voice, Volkswagen Financial Services, Mercedes‑Benz Financial Services and Crédit Agricole Auto Finance in either 14–18 December 2026 or 16–26 February 2027, with judgment due in the months that follow.
- The scheme, finalised in March, covers about 12.1 million agreements and was estimated to cost roughly £9.1 billion, with an average payout near £829 per agreement under the FCA’s design.
- Firms must continue back‑office work to identify eligible cases, collect data and keep customers informed, but can pause calculation and payment steps that may need to be repeated; some banks such as Lloyds and Santander have already set aside provisions.
- If the scheme is quashed the FCA may require lenders to handle up to 19 million individual complaints under the ordinary process or consult on a revised scheme, a shift the regulator says could add years and billions in cost and push payouts into 2028 or beyond.