FCA says motor finance redress payments delayed to 2027 at earliest due to legal challenges

The Financial Conduct Authority warned that compensation payments under its motor finance redress scheme are unlikely to begin in 2026 because of legal challenges filed by four organisations. In a letter to Treasury Committee chair Dame Meg Hillier, FCA Chief Executive Nikhil Rathi said tribunal hearings linked to the challenges are not expected before October 2026.

As a result, payments would not begin until 2027 at the earliest.

Consumer complaints about motor finance were placed on hold in January 2024 while the FCA developed the scheme. 5 billion would be returned to consumers. The organisations that launched legal action are Volkswagen Financial Services UK, Mercedes-Benz Financial Services (UK), Crédit Agricole Auto Finance, and Consumer Voice, which is represented by Courmacs Legal Ltd.

Alex Neill, co-founder of Consumer Voice, said millions of drivers were overcharged through hidden and unfair commission. He added that the FCA's scheme risks leaving many of them missing out on hundreds of pounds they are owed. "People have already been let down once by lenders.

They should not now be let down again by the regulator that is supposed to protect them," Neill said. " The FCA stated that its programme is the quickest and most effective way to deal with such a large number of claims. It had expected millions of complaints to be resolved this year, with most cases completed by the end of 2027.

The National Franchised Dealers Association expressed disappointment at the delays. Chief Executive Sue Robinson said consumers and businesses have been waiting a long time for certainty and that a fair and proportionate outcome should be reached as quickly as possible. 7 million.