Motorists waiting for compensation from the UK's car finance scandal are facing another delay after the Financial Conduct Authority confirmed that payments under its proposed redress scheme are now unlikely to begin before 2027 [1].

The regulator recently announced that key parts of its compensation programme have been partially suspended while legal challenges are heard by the Upper Tribunal [2]. Hearings are scheduled for either December 2026 or February 2027, with a judgment expected several months later [3].

Although the delay is disappointing for many consumers, the FCA says there are still important steps motorists can take while the legal process continues.

Why has the compensation scheme been delayed?

The FCA's proposed redress scheme is currently being challenged by several parties before the Upper Tribunal.

Until those legal proceedings conclude, lenders are not required to calculate or pay compensation [4] for car finance claims or PCP claims under the proposed scheme.

If the tribunal upholds the FCA's approach and there are no further appeals, car finance compensation payments are expected to begin during 2027.

However, if the scheme is overturned or significantly changed, the regulator has warned that compensation could be delayed until 2028 or beyond while alternative arrangements are considered.

Should you still make a complaint?

Yes.

Although compensation payments have been delayed, the FCA continues to encourage consumers to raise concerns with their lender [5] if they believe they may have been affected by mis-sold car finance.

Submitting a car finance claim now means your lender can begin reviewing your agreement while continuing to prepare for whichever outcome the tribunal ultimately reaches.

Consumers do not have to wait until the legal proceedings finish before making a complaint.

Existing complaints remain important

Consumers who have already submitted car finance claims do not normally need to take any further action at this stage.

The FCA says lenders must continue progressing complaints where possible and gathering the information needed to operate the scheme if it is ultimately approved.

In some cases, lenders will also begin writing to consumers whose complaints fall outside the proposed compensation scheme or who are not entitled to redress under the FCA's current rules.

If you receive a decision and believe it is incorrect, you can ask your lender to review the outcome before referring the matter to the Financial Ombudsman Service or considering court action.

What if you have not complained yet?

If you believe you may have been affected by car finance mis-selling, it is still sensible to begin the complaints process rather than waiting for the tribunal to conclude.

Submitting a complaint now may help lenders identify relevant agreements and reduce delays once the legal position becomes clearer.

Consumers who are unsure whether they may qualify can complete a car finance refund check or review their finance documents before contacting their lender.

What does this mean for PCP agreements?

Many of the agreements being reviewed by the FCA involve PCP car finance.

Consumers considering a PCP claim should note that the tribunal proceedings do not change the proposed eligibility criteria.

The same applies to motorists pursuing PCP claims linked to historic commission arrangements.

Anyone exploring PCP finance claims or who believes they may have entered into mis-sold PCP car finance agreements can continue preparing supporting information while the legal process continues.

Likewise, the delay does not determine whether an individual PCP compensation claim will succeed.

Motorists considering PCP car claims may still wish to organise finance agreements and complete a PCP claim check so they are ready once further updates are announced.

Consumers hoping to receive a PCP refund should also be aware that compensation cannot be calculated until the legal proceedings conclude.

Could you still receive a decision?

Yes, in some circumstances.

The FCA has instructed lenders to continue telling consumers when they are not entitled to compensation under the proposed scheme, subject to limited exceptions.

This applies where complaints fall outside the scheme or where lenders conclude that none of the FCA's proposed unfair features are present.

If you receive a rejection and disagree with the outcome, you can ask the lender to review its decision before referring the complaint to the Financial Ombudsman Service.

What happens if the FCA scheme fails?

The regulator has confirmed that it is preparing for every possible outcome.

If the tribunal overturns the scheme, the FCA could consult on a revised compensation programme [6].

However, the regulator has acknowledged that doing so could delay payments until 2028 or beyond.

Alternatively, lenders could instead be required to resolve complaints individually through the normal complaints process, with consumers retaining the right to refer disputes to the Financial Ombudsman Service if necessary.

The current position

Although many motorists had hoped for widespread payouts 2026, the latest tribunal order means that timetable is no longer achievable.

For now, the FCA car finance review continues while firms prepare behind the scenes for every possible outcome.

Consumers who believe they may have experienced mis-sold car finance can still submit a complaint, and anyone expecting a future car finance refund should continue monitoring official updates as one of the UK's largest financial redress programmes moves through the courts.

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References:

1. the Financial Conduct Authority confirmed that payments under its proposed redress scheme are now unlikely to begin before 2027 - https://www.moneysavingexpert.com/news/2026/07/car-finance-redress-scheme-delayed-again/
2. The regulator recently announced that key parts of its compensation programme have been partially suspended while legal challenges are heard by the Upper Tribunal - https://www.bez-kabli.pl/uk-car-finance-redress-path-may-shift-to-courts-after-fca-pushes-back-deadline/
3. Hearings are scheduled for either December 2026 or February 2027, with a judgment expected several months later - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended
4. Until those legal proceedings conclude, lenders are not required to calculate or pay compensation - https://www.reuters.com/world/uk/uks-fca-says-parts-motor-finance-redress-scheme-suspended-2026-07-02/
5. Although compensation payments have been delayed, the FCA continues to encourage consumers to raise concerns with their lender - https://www.chroniclelive.co.uk/news/uk-news/martin-lewis-tells-motorists-making-34231746
6. If the tribunal overturns the scheme, the FCA could consult on a revised compensation programme - https://www.theguardian.com/business/2026/jul/02/fca-ordered-partly-suspend-car-finance-compensation-scheme