The legal challenges to the Financial Conduct Authority's (FCA) motor finance compensation scheme are now scheduled to be heard in February 2027, after the Upper Tribunal issued new directions on how the case should proceed.

In an official statement published on 13 October 2026, the FCA confirmed that the hearing will take place from 16 to 26 February 2027 [1]. A judgment is expected in the months that follow.

The announcement comes after a case management hearing on 5 and 6 October 2026, where the Tribunal considered requests for more evidence and access to information used by the FCA when developing its compensation scheme.

Under the Tribunal's latest directions, the FCA must share additional data and analysis relating to the scheme [2].

For motorists following the car finance scandal, the announcement offers a clearer picture of when the car finance legal challenges will be heard. However, it also confirms that those waiting for potential car finance compensation 2027 will have to wait longer for answers, with payments under the scheme still on hold.

Why has the car finance compensation hearing moved to February 2027?

The Upper Tribunal had originally set aside two possible periods for the hearing. One was 14 to 18 December 2026, while the other was 16 to 26 February 2027.

The final dates depended partly on whether the Tribunal would allow further evidence to be presented and require additional information to be disclosed.

Following the October case management hearing, the Tribunal selected February 2027. Nine days have been allocated for the hearing itself, with another four days reserved for the judges to prepare.

This means the case will no longer be heard in December 2026.

The February hearing will focus on the legal challenges to the FCA's Motor Finance Consumer Redress Scheme. It does not mean compensation will be paid that month, nor does it guarantee that a final judgment will be issued immediately afterwards.

The Tribunal has yet to decide whether the FCA car finance redress scheme is legally valid.

What has the Upper Tribunal ordered?

Alongside confirming the hearing dates, the Upper Tribunal has instructed the FCA to provide more information about how it developed the compensation scheme.

This includes detailed loan data, two datasets known as Data Drop 1 and Data Drop 3, and analysis of how discretionary commission arrangements (DCAs) affected motor finance agreements.

The FCA must also share the code or scripts used for parts of its data matching process.

The additional information will allow the parties to examine the evidence behind the regulator's approach, particularly how it assessed consumer harm and calculated potential compensation.

The Tribunal has also agreed to hear further economic evidence from those challenging the scheme, with the FCA allowed to respond.

Some of this evidence will look at whether certain commission arrangements caused financial harm to motorists and whether the FCA's compensation calculations adequately reflect that harm.

Volkswagen Financial Services and CA Auto Finance have been permitted to submit joint economic evidence examining the relationship between commission arrangements and consumer harm.

Mercedes Benz Financial Services will be able to present evidence about differences between finance providers linked to vehicle manufacturers and other lenders.

Consumer Voice has also been given permission to rely on specified expert reports.

These decisions do not mean the Tribunal agrees with the arguments being put forward. They simply establish which evidence can be considered when the legal challenges are heard in February.

Who is challenging the FCA motor finance redress scheme?

Four organisations are involved in the legal challenges, although they are not all seeking the same outcome.

Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance have questioned parts of the FCA's compensation framework [3].

Their concerns include how the regulator assessed financial harm, which agreements should qualify and how compensation should be calculated.

Consumer Voice has brought a separate challenge. Its concerns centre on whether the scheme goes far enough to compensate motorists who may have lost money because of unfair commission arrangements.

The FCA continues to defend its approach, maintaining that the scheme offers a fair and practical way to resolve historic motor finance complaints.

For now, these are arguments rather than established findings. The Tribunal will consider the evidence before deciding whether the scheme can proceed in its current form.

Will car finance compensation now be delayed until 2027?

For motorists waiting for a payout, the February hearing makes it increasingly clear that compensation under the FCA scheme is unlikely to be paid before 2027, reducing the likelihood of car finance payouts 2027.

The Upper Tribunal partially suspended the scheme in July 2026 while the legal challenges were being considered [4].

Lenders must still prepare for the scheme and continue with the complaint handling activities that remain in force. However, they are not currently required to calculate or pay compensation under the suspended rules.

The FCA expects a judgment in the months following the February hearing, although the exact timing remains uncertain.

What happens after that will depend on the Tribunal's decision.

If the scheme is upheld, lenders could move forward with its implementation, subject to the relevant rules and any further directions.

If the Tribunal finds problems with certain parts of the scheme, the FCA may need to make changes before compensation can proceed.

There is also the possibility that the scheme could be overturned altogether. The FCA has therefore asked lenders to prepare for a situation where motor finance complaints would need to be dealt with through the usual complaint handling process.

For motorists wondering when will PCP claims be settled, February 2027 is now a key date. But it does not mean compensation payments will begin straight after the hearing.

Much will depend on what the Tribunal decides and whether the FCA needs to make further changes to the scheme before payments can go ahead.

How much compensation could affected motorists receive?

The FCA introduced its Motor Finance Consumer Redress Scheme on 30 March 2026 [5] to address unfair practices involving historic motor finance commission arrangements.

It covers potentially eligible agreements entered into between 6 April 2007 and 1 November 2024, although not every agreement from that period will qualify.

The FCA estimates that around 12.1 million agreements could be eligible, with approximately £7.5 billion potentially returned to consumers [6].

Its estimated average payout is £829 per eligible agreement.

That figure is an estimate across the scheme, rather than an amount every motorist can expect to receive.

The value of an individual car finance refund would depend on the finance agreement, the circumstances surrounding the commission and the compensation rules that ultimately apply.

The ongoing legal challenges could also influence how those calculations are made. Until the Tribunal reaches a decision, the existing estimates should not be treated as guaranteed compensation.

Can consumers still make a car finance claim?

Yes. Motorists do not need to wait until February 2027 to raise concerns about a historic car finance agreement.

Anyone who believes they may have been affected by car finance mis-selling can still submit a complaint directly to their lender.

Not having the original finance paperwork does not necessarily prevent someone from checking an old agreement.

Historic agreements may be traceable through lender records, vehicle information or credit reference agencies, even when the car has already been sold or returned.

A car finance refund check or PCP claim check may help motorists identify previous agreements that could need further investigation.

Consumers can complain to their lender for free. They can also choose to use an FCA regulated claims management company or seek help from a solicitor, although professional services may involve fees.

Those who have already made a complaint generally do not need to submit another one simply because the Tribunal hearing has moved to February.

The FCA has also explained that some motorists may still receive letters confirming they are not entitled to compensation under the current scheme rules.

However, consumers should not assume that the absence of a letter means they are automatically eligible for a payout.

What happens next in the car finance scandal?

The next few months will largely focus on preparing the evidence for the February hearing.

The organisations involved will need to work through the Tribunal's directions, including how the additional data should be shared, which information must remain confidential and how expert evidence will be presented.

If disagreements arise over those arrangements, the Tribunal may need to issue further directions before the main hearing takes place.

The confirmed February 2027 dates bring some certainty to the legal timetable, but the bigger question remains unanswered. Will the FCA's compensation scheme survive the challenges in its current form?

Until the Tribunal delivers its judgment, lenders must continue preparing for different outcomes.

For motorists affected by mis-sold car finance, there is no need to wait for the court proceedings to finish for any car finance claims update or before looking into an old agreement. Consumers can still check whether they may have grounds for car finance claims and decide how they wish to pursue a complaint.

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References:

1. In an official statement published on 13 October 2026, the FCA confirmed that the hearing will take place from 16 to 26 February 2027 - https://www.fca.org.uk/publication/documents/motor-finance-directions-oct-2026.pdf
2. Under the Tribunal's latest directions, the FCA must share additional data and analysis relating to the scheme - https://www.fca.org.uk/news/statements/motor-finance-legal-challenge-be-heard-february-2027
3. Volkswagen Financial Services, Mercedes Benz Financial Services and Crédit Agricole Auto Finance have questioned parts of the FCA's compensation framework - https://consumervoice.uk/cars/fca-car-finance-compensation-challenge/
4. The Upper Tribunal partially suspended the scheme in July 2026 while the legal challenges were being considered - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended
5. The FCA introduced its Motor Finance Consumer Redress Scheme on 30 March 2026 - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
6. The FCA estimates that around 12.1 million agreements could be eligible, with approximately £7.5 billion potentially returned to consumers - https://www.fca.org.uk/publication/policy/ps26-3.pdf