UK FCA car finance redress scheme paused by tribunal

A major compensation scheme for millions of British motorists has been partially suspended, delaying payouts that were expected to begin this year. The Financial Conduct Authority (FCA) announced on Thursday, July 2, that it must pause its £9.1 billion redress program following a legal order from the UK's Upper Tribunal.

The suspension is a result of challenges filed by three lenders-Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance-alongside the consumer group Consumer Voice. The tribunal has agreed to hear their cases in either December 2026 or February 2027, with a judgment expected in the months following the hearing. Until that legal process concludes, lenders are no longer required to calculate or pay compensation to eligible customers, nor to inform them of the compensation they are owed.

The scheme was designed to compensate drivers who were overcharged for car loans due to undisclosed discretionary commission arrangements between lenders and car dealers, a practice that was banned in 2021. The FCA estimated that 12.1 million car finance agreements would be eligible for an average payout of approximately £830, totaling £7.5...