Car Finance Redress Delayed Again: What Mis-Sold Motor Finance Customers Should Do Now

If you were hoping for a car finance compensation cheque this year, you'll need to keep waiting. On 2 July 2026, the Upper Tribunal suspended parts of the FCA's motor finance redress scheme after four lenders launched legal challenges, and MoneySavingExpert reports the scheme is now likely delayed until at least 2027.

What the scheme was meant to do

The FCA's PS26/3 policy statement set out an industry-wide scheme to compensate people who took out car finance between 6 April 2007 and 1 November 2024, where the lender paid the broker or dealer a commission that wasn't properly disclosed. Around 12.1 million agreements are potentially eligible, and firms were expected to pay out roughly £7.5 billion in total, working out to an average of about £830 per agreement.

Why it's stalled

The legal challenges mean the courts won't hear the case until December 2026 or February 2027 at the earliest, according to FCA statements on the ongoing litigation. Even if the scheme survives the challenge intact, actual payments aren't expected to start until 2027. That's a long wait for households who were counting on a payout to plug a budget gap.

What to do while you wait

You don't need to sit on your hands. The FCA is clear that you can still complain directly to your lender now, using a free template letter available on its website — there's no need to pay a claims management company a cut of any eventual payout.

Checklist if you think you were mis-sold car finance:

• Check whether your agreement falls between 6 April 2007 and 1 November 2024.
• Find out who arranged your finance — a dealer, a broker, or the lender directly.
• Write to your lender using the FCA's free complaint template rather than paying a claims firm.
• Keep a copy of your complaint and any reference number the lender gives you.
• If your lender doesn't respond within eight weeks, you can refer the matter to the Financial Ombudsman Service.
• Don't assume a delay means you've missed out — most lenders are pausing final decisions until the legal position is settled, not rejecting claims outright.

The wider context

This sits alongside a run of FCA activity this month. The regulator also published its PS26/14 policy statement on regulated fees and levies for 2026/27, confirming a 1% rise in minimum and flat-rate fees, alongside continued staged increases for consumer credit firms — costs that tend to filter through to customers over time.

For comparison, redress schemes of this scale aren't unique to the UK. In the US, the Consumer Financial Protection Bureau has run similar industry-wide auto-lending enforcement actions, while Australia's ASIC has pursued responsible lending cases against car finance providers with comparable remediation programmes. The UK scheme's scale — 12.1 million agreements — is unusually large by international standards.

Key Numbers

• 12.1 million agreements potentially eligible for motor finance redress
• £7.5 billion estimated total industry payout
• £830 average expected redress payment per agreement
• 3.75% current Bank of England Bank Rate, unchanged since June

Sources

• FCA: Legal challenges to motor finance compensation scheme
• FCA: PS26/3 Motor Finance Consumer Redress Scheme
• MoneySavingExpert: Car finance redress scheme likely delayed until at least 2027
• FCA: PS26/14 regulated fees and levies 2026/27

Educational content only — not financial advice.