Source: MoneySavingExpert, “Car finance latest: Mass redress scheme legal challenge court date set for February 2027 – what it means for payouts”, published 13 October 2026. Scheme detail confirmed on the FCA's own motor finance redress scheme statement (30 March 2026, updated 14 September 2026) and its update on the legal challenges to the scheme. Also reported by BBC News, “Car finance compensation payments delayed until next year”, 13 October 2026.
Our view
The compensation is £7.5 billion across 12.1 million car finance agreements, an average of £829 each. What changed this week is the date: the lenders' legal challenge has a confirmed hearing, in the Upper Tribunal, for 16 to 26 February 2027 — and even once that hearing finishes, a judgment isn't expected before around mid-April 2027 at the very earliest. The FCA's March plan — millions of consumers compensated that year, most of the rest by the end of 2027 — has slipped by at least a year. Complaining to your lender is free.
What has happened
The scheme itself comes from the FCA's finding, confirmed in its Policy Statement PS26/3 on 30 March 2026, that motor finance customers were routinely treated unfairly through undisclosed commission arrangements between lenders and the dealers or brokers who sold them finance — arrangements that in many cases meant the broker earned more the higher the interest rate they talked a customer into, without the customer ever being told. It covers regulated car finance agreements taken out between 6 April 2007 and 1 November 2024. At consultation stage the FCA estimated 14.2 million agreements and £8.2 billion in redress; the final scheme, updated 14 September 2026, narrowed that to around 12.1 million agreements and roughly £7.5 billion in redress costs, with total scheme costs — including the industry's own running costs — put at £9.1 billion. The average payout per eligible agreement is £829, though the FCA's own figures show around one in three cases will be capped below the uncapped formula amount, so £829 is an average across the whole scheme, not a guaranteed figure for any individual agreement.
That scheme has been under legal challenge from a group of lenders since May 2026, who argue the FCA's rules are unlawful. In July, the Upper Tribunal suspended parts of the scheme while the challenge is heard, though preparatory work — lenders identifying affected customers and gathering commission data — has continued in the background rather than stopping outright. MoneySavingExpert's reporting this week confirms the full hearing has now been fixed for 16-26 February 2027, the later of two dates the Tribunal considered; an earlier December 2026 slot was rejected. If the FCA's scheme survives that challenge without a further appeal, the regulator still expects payments to start later in 2027. If it's overturned or partly overturned, the FCA will likely have to revise the scheme and could face fresh challenges on the revised version — which could push payments into 2028.
Illustrative figures, built from the FCA's own confirmed scheme numbers and Ofgem's confirmed October 2026 price cap, to show the shape of the figure — your own agreement, if eligible, could pay more or less.
- £829 average payout against Ofgem's confirmed £1,723-a-year typical dual-fuel energy bill (1 October to 31 December 2026): that's just under six months — around 5.8 months — of a typical household's entire energy bill, from one lump sum.
- The scale was cut on the way to the final scheme: 14.2 million agreements and £8.2bn estimated at consultation narrowed to 12.1 million agreements and £7.5bn in the final version — about 2.1 million fewer agreements and £700m less redress, because some commission arrangements didn't meet the final bar for ‘unfair’. Having had car finance in the 2007-2024 window doesn't automatically mean you're one of the 12.1 million.
- About 1 in 3 eligible cases are capped below what the uncapped formula would otherwise generate. A figure under £829 may mean your agreement was capped.
Complaining now
Lenders are still identifying affected customers and gathering commission data while the challenge is heard. The FCA's guidance is to complain directly to your lender, for free, rather than through a claims firm.
Three things to do this week
- Complain directly to your lender, for free. You don't need to wait for the legal challenge to resolve. If you had car finance between April 2007 and November 2024, MoneySavingExpert's free car finance reclaim tool has letter templates and the full list of what to check before you start.
- Avoid paying a claims management company a cut. The FCA's own guidance says complaining to your lender is free, and warns some claims firms charge over 30% of any compensation for work you can do yourself. If you've already signed with one and haven't heard anything, you're generally free to withdraw and either complain directly or switch, because the fee applies to whatever you are eventually paid.
- Don't rush to accept an early ‘full and final’ settlement without checking it against the numbers above first. Some lenders have been offering voluntary settlements broadly in line with the £829 average ahead of the legal process concluding. You're not obliged to accept one, and accepting typically closes the door on getting more later if the FCA's scheme survives the challenge unchanged..
What is still uncertain
Nothing is decided until the Upper Tribunal rules, and the February hearing is only the start of that: a judgment isn't expected before around mid-April 2027 at the earliest, and if any side appeals that judgment, the process runs on longer still. The FCA hasn't published what a revised scheme would look like if the lenders' challenge succeeds in part, so there's no reliable number yet for anyone wondering whether their eventual payout will look different from the £829 average quoted today. And no lender has published a universal timetable for voluntary full-and-final offers — whether more of them appear before the legal process concludes is each lender's own commercial decision, not a rule anyone's committed to.
If car finance is one part of a wider debt picture rather than a stand-alone complaint, our guide to clearing debt works through priority order and payoff order, and your credit report, not your credit score explains what shows up there. If money is a worry this week, free and independent help is available today from MoneyHelper, StepChange and National Debtline.