FCA Updates Motor Finance Guidance Following Partial Suspension: What It Means for Your Claim
Guide 27 July 2026 |  | Andrew Franks |
The latest publication from the FCA, issued on 20 July 2026, gives firms which will be responsible for the payment of car finance compensation further operational guidance on delivering this redress under the FCA car finance scheme. The update does not change any eligibility criteria, or the overall framework for the compensation to be paid to consumers.
As a motorist thinking about making car finance claims, here’s what you need to know about the FCA’s latest update.
Why Has the FCA Updated Its Guidance?
The suspension means firms are temporarily relieved from carrying out specific compensation-related activities until the Tribunal proceedings have concluded. However, the wider scheme remains in place and lenders are still expected to prepare for its implementation.
In other words, this is an operational update rather than a change in policy.
What Has Changed?
The FCA has confirmed that, while the partial suspension remains in effect, firms are not currently required to:
- calculate compensation for eligible customers;
- make compensation payments; or
- issue compensation notifications.
These requirements will only resume once the suspension is lifted or the legal proceedings reach a conclusion.
What Hasn't Changed?
For most consumers, very little has changed.
The FCA has confirmed that:
- the complaints handling pause ended on 31 May 2026 [3];
- firms must continue preparing their systems and processes for the compensation scheme;
- the Motor Finance Compensation Scheme itself remains in place; and
- the partial suspension does not affect who may ultimately qualify for compensation.
If you believe you may have a valid car finance claim, there is no need to take additional action simply because of this latest guidance update.
Additional Clarifications for Firms
The updated guidance also provides lenders with further clarification on several operational issues.
These include:
- how successor lenders should administer eligible agreements;
- how complaints already referred to the Financial Ombudsman Service should be handled;
- clarification around agreement start dates; and
- which complaints fall outside the scope of the compensation scheme.
These points are primarily intended to help firms apply the scheme consistently once compensation calculations begin.
What Does This Mean for Motorists?
The FCA's latest publication should not be viewed as a further delay to the scheme.
Instead, it explains how firms should continue operating while the Upper Tribunal considers legal challenges affecting parts of the compensation process.
Consumers who may be eligible for mis-sold car finance compensation remain covered by the FCA's proposed redress scheme, subject to the final outcome of the ongoing legal proceedings.
Likewise, motorists exploring PCP claims or PCP finance claims should be aware that the guidance is directed at lenders rather than consumers and does not introduce any new requirements for making or progressing a complaint.
The Bottom Line
The FCA's updated guidance is largely administrative, providing firms with greater certainty about what they should and should not do while parts of the compensation scheme remain suspended.
Although lenders are not yet required to calculate or pay compensation, they are expected to continue preparing for the scheme so they are ready to act once the suspension ends.
For motorists, the latest update changes very little. The FCA's Motor Finance Compensation Scheme [4] remains in place, and consumers who may be eligible for car finance compensation should continue to monitor updates from their lender and the regulator as the legal process progresses.
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References:
- The Financial Conduct Authority (FCA) has updated its guidance for lenders on how to implement its Motor Finance Compensation Scheme in light of the Upper Tribunal’s partial suspension of aspects of the redress scheme - https://www.fca.org.uk/publication/corporate/motor-finance-further-information-firms.pdf
- The updated guidance reflects the legal position following the Upper Tribunal's decision to partially suspend certain elements of the Motor Finance Compensation Scheme while legal challenges continue - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended
- the complaints handling pause ended on 31 May 2026 - https://www.fca.org.uk/publications/policy-statements/ps25-18-changes-handling-rules-motor-finance-complaints
- FCA's Motor Finance Compensation Scheme - https://www.fca.org.uk/publication/policy/ps26-3.pdf