The UK’s car finance redress scheme has hit another delay. On 2 July 2026, the Upper Tribunal partially suspended the Financial Conduct Authority’s (FCA) compensation scheme while it hears legal challenges from several lenders. If you were mis-sold a car finance agreement, here is what the suspension means and why it still pays to act now. You can check your eligibility at any time.
What is the car finance redress scheme?
The FCA confirmed its motor finance consumer redress scheme in policy statement PS26/3. It is designed to compensate people who took out car finance before January 2021 where a lender failed to properly disclose commission paid to the dealer or broker who arranged the deal.
These are often called discretionary commission arrangements, where the dealer could raise your interest rate to earn more commission. The FCA estimated around 12.1 million agreements could be eligible, with a typical payout of about £830 per claim and a total bill of roughly £7.5 billion.
Why has the scheme been partially suspended?
Four parties have challenged the scheme at the Upper Tribunal. Three are lenders—CA Auto Finance, Mercedes-Benz Financial Services and Volkswagen Financial Services—while the fourth, Consumer Voice, is pushing for higher payouts for drivers.
Under the partial suspension, firms are not currently required to calculate or pay compensation, or send communications about redress owed, in line with the original scheme timetable. Lenders must still comply with all the rules that have not been suspended and continue much of the admin work in the background.
When will the delay be resolved?
The Upper Tribunal has confirmed it will hear the challenges on 14 to 18 December 2026, or 16 to 26 February 2027. The exact dates depend on whether any party applies for further expert evidence or disclosure.
Even if the challenges fail, payouts are unlikely to begin before mid-2027. The FCA wants firms to keep identifying affected customers now so compensation can start quickly once the legal process concludes.
What should you do while the scheme is suspended?
The suspension does not stop you from taking action. In fact, getting your complaint in now means you are already in the queue when the scheme resumes.
- Complain to your lender if you believe you had a discretionary commission arrangement before January 2021.
- Ask for a review if your lender rejects your case and you think it has made a mistake.
- Escalate to the Financial Ombudsman Service if you remain unhappy with the outcome.
- Keep your paperwork, including your finance agreement and any correspondence, in one place.
Lenders are expected to keep complainants updated on the legal challenge, what the suspension means and the likely impact on timings.
Could you be owed compensation?
If you bought a car on PCP or hire purchase before January 2021 and were not told how much commission the dealer earned, you may have grounds to claim. The delay is frustrating, but it does not change your underlying rights—it simply pushes back when money is likely to be paid.
The sooner you check your position, the sooner your claim can be assessed. Find out if you qualify using our free eligibility checker and be ready for when the redress scheme moves forward.