Assistant Editor – News & Investigations
11 May 2026
The financial regulator’s major car finance mis-selling redress scheme, originally planned to start in July this year, will now likely be delayed to November due to four legal challenges. But in the meantime, it’s still best to get your complaint in now, which you can do for FREE using our DIY car finance reclaim tool.
Three of the challenges to the scheme are from car finance lenders: CA Auto Finance, Mercedes-Benz Financial Services, and Volkswagen Financial Services. The fourth is from organisation Consumer Voice, which is aiming to increase payouts for drivers.
In response, regulator the Financial Conduct Authority (FCA) has said that its scheme is “the quickest, fairest and most cost-effective way” to compensate consumers, and that it will defend it “robustly” in court.
Redress scheme unlikely to start before November 2026
In a statement published on Friday 8 May 2026, the FCA said that timelines for the legal cases were still “unclear” – but it added that the hearings are “unlikely” to take place before October 2026.
On a “precautionary basis”, it has told lenders to prepare for a potential decision from the court in mid-November 2026 – meaning the mass redress scheme is unlikely to start before then.
However, it may be possible for some “preparatory work” relating to the scheme (firms identifying affected motorists, for example) to go ahead in the background while the court process unfolds. The FCA says it will provide a further update on this “as soon as possible”.
The legal grounds behind the challenges
All four of the challenges argue that the rules governing the regulator’s mass redress scheme are unlawful, either as a whole or in certain parts. They are therefore asking the court to quash or invalidate them.
The FCA says the challenges are based on a variety of grounds, some of which overlap. Taken together, these effectively claim that the scheme is “both unduly favourable to consumers and unduly favourable to lenders”, the FCA notes.
Some of the key elements in the disputes include:
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Whether the FCA has the power to make the rules relating to the scheme.
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How those rules apply to agreements entered into before 1 April 2014 (see below for more on this point).
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The basis for determining whether lenders are liable and whether consumers suffered loss or damage.
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How redress should be calculated, including the approach to estimating consumer losses by adjusting the interest rate actually paid, the compensatory interest rate, and the FCA’s consideration of consumers’ actual losses.
It’s still best to get your complaint in ASAP
When the news of a legal challenge first broke, MoneySavingExpert.com founder Martin Lewis said: “The most important thing is don’t let this put you off putting a complaint in. If you had PCP or HP motor vehicle finance from April 2007 to November 2024, putting a complaint in likely means an easy and quicker payout, and you don’t need to pay anyone to do it – just use the free DIY tool.”
The regulator has also reiterated that its advice for consumers is to complain directly to their lender, warning: “You do not need a law firm or claims management company, which may charge over 30% of any compensation.”
Car finance redress scheme need-to-knows
Details of the FCA’s major car finance redress scheme were published in March 2026. Below are some of the key points from that initial announcement, though things could now change depending on how the various legal challenges play out.
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There were due to be two separate redress schemes. One covering agreements between 6 April 2007 and 31 March 2014; and another covering agreements between 1 April 2014 and 1 November 2024.
This is because while the FCA does have the power to include agreements covering between 6 April 2007 and 31 March 2014, it was felt that this period could be subject to a legal challenge due to the age of the agreements involved. The idea was that if this happened, it could have seen redress for the later period, from 1 April 2014, continue.
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Around 12.1 million agreements were to be eligible for compensation. Down from a previously estimated 14.2 million. This was due to the eligibility criteria being tightened.
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The average typical payout per claim was due to be £830. Up from an anticipated £700 ish. This is because the compensatory interest rate due to be applied was higher than previously expected, at base rate plus 1%, with a new minimum of 3%. Plus, for cases before 2014, a change to the calculation meant you were due to be paid more than previously anticipated.
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The total amount to be paid out was expected to be £7.5 billion. Down from £8.2 billion. This is because there were more exclusions than previously laid out, and the FCA assumed fewer people than first expected would claim.
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