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Car finance compensation on hold until a legal challenge is heard in 2027
In short
The FCA's car finance compensation scheme is on hold while a legal challenge goes through the courts. The case is due to be heard between 16 February and 3 March 2027, so nobody owed money under the scheme will be paid before then. Some deadlines still apply, and scammers are already using the scheme as bait.
What has happened
The Financial Conduct Authority (FCA) set up a compensation scheme for people whose car finance lender paid commission to the broker who arranged the deal. Parts of the scheme are now suspended while a legal challenge to it is decided.
The FCA says the challenge is due to be heard between 16 February and 3 March 2027. Until the legal process ends, lenders do not need to calculate or pay compensation to people who are owed money under the scheme.
What it means for you
If you had car finance and think you could be owed money, you will not receive a payment from the scheme before the hearing. The FCA expects people who are owed compensation to get around £830 per agreement on average if the scheme goes ahead.
Not everything has stopped. If you complained to your lender and you are not owed compensation, your lender should still contact you. If your agreement began on or after 1 April 2014 and you complained by 30 June 2026, that should happen by 18 November 2026. For older agreements, where you complained by 31 August 2026, it should happen by 18 January 2027.
Who it affects
People who had car finance where the lender paid the broker a commission, and anyone who has already complained to their lender about it.
What you can do
- Be wary of anyone who calls, texts or emails offering car finance compensation. The FCA says it would never ask you to transfer money or ask for your bank PINs or passwords.
- You do not have to use a claims management company or a law firm. The FCA warns they may charge you over 30% of any compensation, and signing up with more than one can mean paying more than one fee.
- Check the FCA's car finance page for the latest dates. It is updated as the case moves on.
- If car finance payments are already a struggle, tell your lender and get free debt advice. You do not have to wait for the scheme.
Sources
Every fact in this page was checked against these official sources on 28 October 2026.
- Car finance claims Financial Conduct Authority
- Motor finance legal challenge to be heard in February 2027 Financial Conduct Authority
- Motor finance scheme partially suspended Financial Conduct Authority
- FCA confirms motor finance redress scheme Financial Conduct Authority
Written and fact-checked by the PiggyBank editorial team. Published 28 October 2026. This news is general information, not financial advice. How we write and check our guides.
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