The Upper Tribunal has published a detailed explanation of why it wants more economic evidence examined in the Financial Conduct Authority's (FCA) motor finance motor finance legal challenges in its compensation scheme.

The document, published on 2 November 2026, gives a closer look at the disagreements between the regulator, three motor finance lenders and Consumer Voice.

At the heart of the dispute is a question that matters to millions of motorists: how should the FCA decide whether someone suffered financial harm, and how much compensation should follow?

The Tribunal has allowed further expert evidence and required the FCA to share information supporting parts of its compensation calculations.

However, this is not a ruling that the calculations are wrong. The legal challenges remain unresolved.

The main hearing is scheduled for 16 February to 3 March 2027, with a judgment expected in the following months.

For consumers following the car finance scandal, the latest publication explains why the compensation scheme is facing such detailed scrutiny, but it does not bring payments any closer.

What has the Upper Tribunal published?

On 2 November 2026, HM Courts and Tribunals Service published the Tribunal's written reasons in CA Auto Finance and Others v Financial Conduct Authority, under reference [2026] UKUT 00423 (TCC) [1].

The document explains decisions made on 12 October, following a case management hearing on 5 and 6 October 2026.

Those decisions allowed the organisations challenging the FCA's scheme to present economic evidence. They also required further disclosure of information held by the regulator.

The Tribunal wanted to explain why it considered that evidence potentially useful, despite the FCA's objections to parts of the applications.

This distinction is important. The latest publication gives reasons for earlier procedural decisions. It does not settle the legal dispute or decide what compensation motorists should receive.

The full document is available through the official Upper Tribunal car finance decision published on GOV.UK [2].

Why does the Tribunal want to examine the FCA's calculations?

The FCA introduced its Motor Finance Consumer Redress Scheme in March 2026 [3] to address certain unfair practices involving historic commission arrangements.

The scheme covers potentially eligible agreements entered into between 6 April 2007 and 1 November 2024.

Its compensation method considers factors such as commission and the financial harm associated with an agreement.

Part of that approach involves adjustments linked to the annual percentage rate, or APR, charged on finance.

The FCA developed its calculations using historical lending information, including comparisons between agreements involving discretionary commission arrangements and those without them.

The legal challenges raise questions about how much weight the regulator placed on this analysis and whether it provides a sufficient basis for its compensation approach.

The Tribunal considers that expert evidence may help it examine those questions.

In its written reasons, the Tribunal noted that economic analysis could have played a significant role in the FCA's decisions. It also recognised that technical evidence could help assess the proportionality of parts of the scheme.

This does not mean the FCA used the wrong figures. The Tribunal will consider that issue alongside the wider legal arguments at the substantive hearing.

What information must the FCA disclose?

One of the more significant parts of the decision concerns the information behind the regulator's economic analysis.

Volkswagen Financial Services and CA Auto Finance requested access to datasets and documents used by the FCA when developing the scheme.

The Tribunal agreed that disclosure of certain material was needed to allow the legal challenges to be examined fairly.

This includes historical loan data and the FCA's analysis of how discretionary commission arrangements may have affected borrowing costs.

It also includes the underlying computer code or scripts used for parts of the regulator's comparison methodology.

Why does that matter?

The parties want their economists to examine how the FCA reached its conclusions, rather than relying only on the final figures published by the regulator.

The evidence may help establish whether different methods could have produced materially different results.

However, the Tribunal did not order unlimited access to the FCA's records.

Some requests were refused, while commercially sensitive lender information will be shared only with authorised legal representatives and experts under confidentiality restrictions.

The disclosure decision is therefore narrower than a general requirement for the FCA to release all its internal material.

What are Volkswagen and CA Auto Finance challenging?

Volkswagen Financial Services and Crédit Agricole Auto Finance have raised questions about the evidence used to support the scheme.

Their arguments include whether the FCA adequately established that particular commission arrangements caused financial harm.

They also question whether the compensation method could have been designed to reflect individual losses more accurately.

One area of disagreement concerns the use of APR adjustments to estimate the effect of commission practices on borrowing costs.

The lenders want economic experts to examine the data and consider whether the assumptions behind those adjustments are supported.

They have also questioned whether the scheme accounts properly for certain finance incentives, including subsidised interest rates or deposit contributions.

The Tribunal has allowed expert evidence on relevant issues, although it has not accepted every question the lenders originally wanted examined.

These remain arguments raised by the lenders. The Tribunal has not decided whether their criticisms are correct.

Why has Mercedes Benz raised different concerns?

Mercedes Benz Financial Services has focused partly on differences between types of motor finance providers.

Some lenders operate independently of vehicle manufacturers. Others are connected to the manufacturers whose vehicles they finance.

These manufacturer linked providers are commonly known as captive lenders.

Mercedes argues that differences between these business models may matter when assessing consumer harm and compensation.

For example, manufacturer finance offers may involve subsidised interest rates or other incentives that affect the overall price of a deal.

Mercedes questions whether the FCA gave sufficient consideration to these differences when designing a scheme intended to cover the wider market.

The Tribunal has permitted economic evidence examining those distinctions.

However, it has not decided that manufacturer linked lenders should be treated differently or that customers of those lenders would receive excessive compensation.

Those questions remain open.

What is Consumer Voice arguing?

Consumer Voice is challenging the scheme from a different perspective [4].

While the lenders have questioned aspects of the FCA's approach to identifying harm and calculating redress, Consumer Voice argues that the compensation framework may not provide enough money to affected motorists.

Its concerns include the economic analysis used to develop the APR adjustments and the regulator's treatment of the wider motor finance market.

Consumer Voice has submitted evidence from economists examining the compensation methodology and the potential impact of higher redress costs on lenders.

The FCA has challenged aspects of that evidence, including assumptions about how consumer losses should be measured.

The Tribunal has nevertheless permitted Consumer Voice to rely on its expert reports.

That permission does not mean the judges agree that consumers are being undercompensated. It means the evidence can be considered when the legal challenges are heard.

What has the FCA said in response?

The FCA maintains that its compensation scheme involves more than calculating the precise financial loss on every agreement.

The regulator argues that the scheme addresses unfairness arising from customers not receiving important information when arranging finance.

It also says that developing compensation rules for millions of historic agreements requires balancing several considerations.

These include fairness, simplicity, the cost of administering the scheme and the need to resolve complaints efficiently.

The FCA has argued that economic evidence should not replace the legal questions the Tribunal must decide.

However, the Tribunal considered that some technical evidence could still be useful in examining the challenged decisions.

The FCA's position remains that its compensation scheme is lawful and offers an effective way of addressing widespread historic complaints.

The Tribunal will consider that position alongside the arguments from the four challengers.

Could the latest decision change car finance compensation amounts?

Not at this stage.

The Tribunal has not ordered the FCA to change its compensation calculations or increase or reduce the amounts motorists could receive.

The regulator's current estimate remains approximately £829 per eligible agreement [5].

Across the wider market, the FCA estimates that around 12.1 million agreements could qualify, with total consumer mis-sold car finance payouts 2027 of approximately £7.5 billion if 75% of eligible consumers participate.

These are estimates rather than guaranteed payments.

The legal challenges could eventually affect how compensation is calculated, but the outcome is still uncertain.

If the Tribunal upholds the FCA's approach, the scheme may be able to continue in its current form, subject to any further legal proceedings.

If it finds problems with particular provisions, the regulator may need to reconsider those parts before compensation can proceed.

For now, the latest publication explains what evidence will be examined. It does not establish a new compensation amount.

When will the Upper Tribunal hear the legal challenges?

The substantive Upper Tribunal hearing 2027 will take place from 16 February to 3 March [6].

The FCA confirmed the extended schedule on 26 October 2026 after further case management directions.

Before the hearing, the parties must complete their remaining expert evidence and exchange responses.

The experts are also expected to identify where they agree and which matters remain disputed.

A judgment is expected in the months after the hearing.

However, 3 March 2027 is the scheduled end of the hearing, not a compensation payment date.

The newly published Tribunal reasons do not change that timetable.

What does this mean for motorists with car finance claims?

The FCA Motor Finance Consumer Redress Scheme remains partially suspended following an Upper Tribunal order made in July 2026 [7].

Lenders must continue preparing for the scheme and follow the rules that remain in force.

However, they are not currently required to calculate or pay compensation under the suspended provisions.

For consumers with existing car finance claims, the publication of the Tribunal's reasons does not mean their complaint has been approved or rejected.

Motorists who believe they may have been affected by car finance mis-selling can still complain directly to their lender for free.

This includes consumers with historic Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements that may have involved unfair commission arrangements.

Anyone who no longer has their original documents may still be able to identify previous agreements using bank statements, credit records or information held by their lender.

A car finance refund check may also help identify agreements worth investigating.

Those who have already submitted a complaint generally do not need to make another one because the Tribunal has published its reasons.

What happens next?

The focus now shifts to completing the evidence required for the February hearing.

The Tribunal will examine the competing arguments about the FCA's legal powers, the evidence supporting its compensation approach and whether the scheme meets the relevant legal requirements.

Its latest publication helps explain why additional economic evidence was permitted and why certain FCA records must be disclosed.

It does not settle the compensation dispute.

For motorists waiting for a car finance refund or an FCA car finance claims update, the position remains largely unchanged.

The scheme is still partially suspended, the hearing is scheduled to finish on 3 March 2027, and the FCA has not confirmed when individual compensation payments will begin.

The eventual judgment will provide a clearer picture of whether the scheme can proceed as planned or whether changes are needed.

Frequently asked questions

Has the Upper Tribunal ruled against the FCA compensation scheme?

No. The Tribunal has published its reasons for allowing further expert evidence and ordering disclosure of certain information. It has not ruled on whether the scheme itself is lawful.

Does the decision mean motorists will receive more compensation?

Not necessarily. Consumer Voice has challenged aspects of the compensation methodology, but the Tribunal has not ordered an increase in payments. The FCA's average estimate remains £829 per eligible agreement.

When will PCP claims be settled?

There is no confirmed payment date. The hearing is scheduled to finish on 3 March 2027, with a judgment expected in the following months. Motorists will have a clearer idea of when PCP compensation or PCP refund might begin once the legal challenges are resolved.

Can I still make a car finance claim?

Yes. Consumers can still raise complaints about potentially unfair historic finance agreements. They can contact their lender directly for free or seek professional assistance if they prefer.

Does the latest decision change the FCA's eligibility rules?

No. The Tribunal's published reasons concern expert evidence and disclosure. They do not introduce new eligibility requirements or change the existing compensation rules.

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References:

1. On 2 November 2026, HM Courts and Tribunals Service published the Tribunal's written reasons in CA Auto Finance and Others v Financial Conduct Authority, under reference [2026] UKUT 00423 (TCC) - https://assets.publishing.service.gov.uk/media/6ae85be43d3bf10d23546298/Motor_Finance_Redress_Scheme_CA_Motor_Finance_and_Others_v_FCAReasons_for_Directions_12_Oct_2026.pdf
2. The full document is available through the official Upper Tribunal car finance decision published on GOV.UK - https://www.gov.uk/tax-and-chancery-tribunal-decisions/motor-finance-redress-scheme-ca-auto-finance-and-others-v-the-financial-conduct-authority-2026-ukut-00423-tcc
3. The FCA introduced its Motor Finance Consumer Redress Scheme in March 2026 - https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
4. Consumer Voice is challenging the scheme from a different perspective - https://consumervoice.uk/cars/fca-car-finance-compensation-challenge/
5. The regulator's current estimate remains approximately £829 per eligible agreement - https://www.fca.org.uk/publication/policy/ps26-3.pdf
6. The substantive Upper Tribunal hearing 2027 will take place from 16 February to 3 March - https://www.fca.org.uk/news/statements/motor-finance-legal-challenge-be-heard-february-2027
7. The FCA Motor Finance Consumer Redress Scheme remains partially suspended following an Upper Tribunal order made in July 2026 - https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended