Car finance compensation on hold: court dates, deadlines and what to do now

What's happened

Car finance compensation is stuck in the courts, and this week's hearing will help decide how long the wait will be. The Upper Tribunal held a two-day case management hearing on Monday 5 and Tuesday 6 October to sort out disclosure, expert evidence and other practical issues in the legal challenges to the Financial Conduct Authority's (FCA) motor finance redress scheme. It will also settle whether the full hearing goes ahead from 14 to 18 December 2026, if five days are needed, or from 16 to 26 February 2027, if nine are needed.

The FCA published the scheme on 30 March 2026. It covers regulated car finance agreements taken out between 6 April 2007 and 1 November 2024 where customers weren't told about certain arrangements between the broker and lender, such as discretionary commission. The FCA estimates around 12.1 million agreements are eligible and that it will return about £7.5 billion to consumers, with an average payout of around £830 per agreement.

Four challenges are being heard. Three lenders, CA Auto Finance, Mercedes-Benz Financial Services and Volkswagen Financial Services, argue among other things that the FCA lacks the power to cover agreements made before 2014. The fourth, from Consumer Voice, wants the scheme to pay out more.

Why payouts have stopped

The tribunal partially suspended the scheme in the summer. The FCA says: "Until the legal process ends, lenders do not need to calculate or pay compensation to people owed money under the scheme." Lenders must, however, still contact people who complained but aren't owed anything. MoneySavingExpert says payouts could start in 2027 if the scheme is upheld and not appealed, but could slip to 2028 or later if it's overturned. Law firm CMS notes that a judgment is expected six to eight weeks after the final hearing.

Who's affected

• Anyone who bought a car or other vehicle on finance, such as PCP or hire purchase, between April 2007 and November 2024. The FCA estimates around 37% of agreements made in that period qualify.
• People who have already complained. You don't need to complain again. If your agreement began on or after 1 April 2014 and you complained by 30 June 2026, your lender should contact you by 18 November 2026. For agreements before 1 April 2014, where you complained by 31 August 2026, the date is 18 January 2027.
• People who haven't complained yet. MoneySavingExpert's advice is to get your complaint in as soon as possible.

What it means in pounds: a worked example

Say you had two eligible agreements, one for a family car in 2016 and another in 2021. At the FCA's average of about £830 each, that would be roughly £1,660, although the FCA stresses some people will get more and some less.

Now compare going it alone with signing up to a claims firm. The FCA warns that a claims management company or law firm can charge up to 36% in fees. On £830, a 36% fee is about £299, leaving you around £531. Across both agreements, that's close to £598 handed over for something you can do yourself for free.

What to do now

1. Dig out your paperwork. Look for finance agreements, emails or bank statements showing monthly payments to a car finance company between 2007 and 2024.
2. Complain directly to the lender. The FCA's website lists lenders' contact details and has complaint templates. MoneySavingExpert has a free complaint tool too.
3. Don't pay a claims firm. The FCA is clear you don't need a claims company or lawyer to take part in the scheme.
4. Note your lender's deadline. If you complained in time, put 18 November 2026 or 18 January 2027 in your diary, depending on when your agreement started.
5. Respond quickly to any decision. The FCA says you'll have one month to accept or challenge your lender's response once it arrives.

Your questions answered

When will car finance compensation be paid?

Not until the legal challenges are resolved. The full hearing is in December 2026 or February 2027, so MoneySavingExpert expects payouts in 2027 at the earliest if the scheme survives.

I've already complained. Do I need to do anything?

No. You don't need to resubmit an eligible complaint. Wait to hear from your lender.

How much could I get?

The FCA's average is around £830 per agreement, but it will vary.

Do I need a claims company?

No. You can complain for free, and the FCA warns claims firms can take up to 36% of your payout.

Ways to save

While you wait, cutting your running costs is a sure-fire saving. Compare tyre prices at MyTyres before your next replacement, and shop around for servicing and parts at Halfords rather than paying dealer prices.

Sources: MoneySavingExpert, FCA, CMS

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