Story perspectives

FCA Delays £9bn Car-Finance Compensation Until 2027

7/3/2026

Summary

FCA Suspends Scheme

FCA suspended the car-finance mis-selling compensation scheme, delaying payouts until mid-2027.
Upper Tribunal will hear challenges from lenders such as Close Brothers and Volkswagen Financial Services in Dec 2026 or Feb 2027.
The scheme covers about 12 million loans (?40 % of 2007-2024 agreements) with average £829 payouts (£9.1 billion total).
Martin Lewis urged free complaints now, noting that FCA chief Nikhil Rathi warned firms may keep 30 % of payouts and pending complaints could add £6 billion.

Summary

Barings Wins Appeal

Barings Law won a Court of Appeal ruling permitting actions for mis-sold car-finance claims and will run cases where claimants keep 100 % of compensation.
The FCA warned that some claims-management and law firms practice poorly and urged consumers to use its template complaint letter.
Consumer Voice says the FCA scheme breaches limitation-period rules, would under-compensate motorists, and notes that Volkswagen, Mercedes Benz and Crédit Agricole finance firms have joined the legal challenge.

History

Historical Context

The 2015 UK payment-protection-insurance (PPI) redress programme, launched after the Financial Services Authority’s 2012 findings, paid £11.3 billion to consumers across. Lloyds Banking Group, Barclays and HSBC each settled over £1 billion in claims, while the Treasury allocated £2 billion for oversight regulatory. Similarly, the FCA’s 2026 suspension of the car-finance mis-selling compensation scheme faces challenges from Volkswagen Financial Services, Close Brothers, Barings Law and Consumer Voice. The precedent suggests that extensive litigation and £6 billion pending payouts could reshape UK consumer-credit regulation and compel firms to retain more compensation.

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FCA Suspends Scheme

FCA suspended the car-finance mis-selling compensation scheme, delaying payouts until mid-2027.
Upper Tribunal will hear challenges from lenders such as Close Brothers and Volkswagen Financial Services in Dec 2026 or Feb 2027.
The scheme covers about 12 million loans (?40 % of 2007-2024 agreements) with average £829 payouts (£9.1 billion total).
Martin Lewis urged free complaints now, noting that FCA chief Nikhil Rathi warned firms may keep 30 % of payouts and pending complaints could add £6 billion.

1 / 3