The Upper Tribunal has confirmed it will hear the legal challenges to our motor finance compensation scheme between 16 to 26 February 2027.
The scheme was challenged by 3 lenders - Volkswagen Financial Services, Mercedes Benz Financial Services, and Crédit Agricole Auto Finance - and by Consumer Voice, represented by Courmacs Legal.
The scheme is currently partially suspended. However, firms must keep preparing for the scheme and progress complaints as far as possible.
Our scheme is the quickest, fairest and most efficient way to compensate consumers and we will defend it robustly.
Advice for lenders
Lenders must comply with the scheme rules that remain in force[2]. This includes sending letters to some consumers not owed compensation under the scheme.
Firms should plan for the possibility that, if the scheme or parts of it are quashed, there may be no motor finance compensation scheme and no complaint handling pause. In that scenario, lenders would need to be operationally and financially ready to resolve complaints through the usual complaint-handling process and within the usual statutory timescales.
We expect lenders to plan rigorously for this scenario, make the necessary financial provisions and engage with their auditors.
We encourage firms to contact us if they have questions. We will keep our firm web page[3] updated with the latest information.
Advice for consumers
The challenge is due to be heard between 16 to 26 February 2027, with a judgment expected in the following months. Until the legal process concludes, lenders do not need to calculate or pay compensation under the scheme.
If you have complained, your lender may tell you if you are not owed compensation. However, some consumers may not be told until the legal process concludes, so not receiving a letter does not necessarily mean you are owed compensation.
If you are concerned about your car finance agreement and have not yet complained, you can complain directly to your lender for free. Our claims page explains how[4] and provides lenders' contact details[5].
You do not need to use a law firm or claims management company (CMC), which may charge up to 36% of any compensation. Don’t sign up with more than one CMC or law firm as you may be charged multiple fees.
If you want to cancel an agreement with a CMC or law firm, you may be asked to pay a fee. That fee must be reasonable and reflect the work done. Most car finance claims are still at an early stage, so check any fee demand carefully.
We and other regulators have seen poor practice from some CMCs and law firms. If you are concerned about how they have handled your claim, you should complain directly to the firm. We have created a template letter (DOC)[6] to help.