FCA SUSPENDS PARTS OF £9BN MOTOR FINANCE REDRESS SCHEME

The Upper Tribunal has ordered a partial suspension of the Financial Conduct Authority's motor finance redress scheme following legal challenges from four commercial parties. The suspension was agreed between the FCA and the challengers: Consumer Voice, Volkswagen Financial Services, Mercedes Benz Financial Services, and Crédit Agricole Auto Finance. The tribunal confirmed it will hear the legal challenges between 14 and 18 December 2026 or 16 and 26 February 2027, with final dates depending on applications for further expert opinion or disclosure of information.

The partial suspension allows firms to continue preparing for the scheme and processing complaints whilst avoiding work that may require repetition if the legal challenges succeed. Firms are not required to calculate or pay redress, or send communications about compensation owed, according to the original scheme timetable until the tribunal process concludes. Firms must continue identifying relevant complaints and agreements, gathering data on commission arrangements and disclosure practices, and responding to complainants who are not owed compensation under the scheme by relevant deadlines, subject to limited exceptions.

The FCA stated the suspension provides certainty for some consumers sooner by requiring firms to notify complainants who are not entitled to compensation. The regulator said the approach recognises the operational strain and uncertainty firms face whilst acknowledging the frustration of their customers. The FCA maintained that its scheme remains "the quickest, fairest and most efficient way to compensate consumers" and stated it will defend the scheme robustly during the tribunal proceedings.