Car finance compensation: the tribunal date is February 2027

The car finance compensation scheme has a court date, and it is later than anyone waiting for a payment would like. The Upper Tribunal will hear the legal challenges to the scheme between 16 and 26 February 2027, the Financial Conduct Authority (FCA) confirmed on 13 October. For a driver who held a personal contract purchase (PCP) or hire purchase (HP) agreement at any point between 6 April 2007 and 1 November 2024, that is the earliest point at which the process can restart in earnest.

The scheme is an industry-wide redress scheme, free to use, built to compensate customers who were not told about the commission arrangements behind their car finance. It was challenged on 1 May 2026, and the tribunal suspended parts of it on 2 July 2026. What changed this week is the timetable. A hearing date now exists, and the FCA expects a judgment in the months that follow it.

Who is bringing the challenge

Four challengers are named in the regulator's statement. Three are lenders: Volkswagen Financial Services, Mercedes-Benz Financial Services and Credit Agricole Auto Finance. The fourth is Consumer Voice, which is represented by Courmacs Legal.

The FCA's position has not moved. It describes the scheme as "the quickest, fairest and most efficient way to compensate consumers" and says it will defend it robustly. That is a regulator arguing for its own process rather than for a particular payout, and the difference is worth being precise about. No figure has been published for what an individual claimant will receive, and lenders do not have to calculate one while the legal process runs.

What the suspension does and does not stop

Partially suspended means exactly that. Lenders do not have to calculate or pay compensation while the legal process runs, which is the part most people care about. They do have to keep preparing for the scheme, and to progress complaints as far as they can. They must also comply with the rules that remain in force, and one of those requires lenders to write to some consumers who are not owed compensation.

That last detail cuts both ways. A letter saying you are not owed anything can arrive now. So can no letter at all, and the FCA is explicit that some consumers may not be told until the legal process concludes, which means a silent postbox is not evidence either way. If you have complained and heard nothing, your complaint has not vanished. It is sitting behind a court case.

If the scheme is quashed

The FCA has told firms to plan for the possibility that the scheme, or parts of it, is quashed. In that scenario there would be no scheme and no complaint-handling pause, and complaints would be resolved through the normal process within the usual statutory timescales. The regulator expects lenders to plan rigorously for it, make the necessary financial provisions and talk to their auditors.

For a consumer, a quashed scheme would not mean the end of redress. It would mean the work moving back to individual lenders, with the Financial Ombudsman Service as the next step and the courts behind that. What disappears is the single route and the queue that comes with it. This is also why the FCA keeps arguing that a scheme is cheaper: it estimates that dealing with the same complaints without one would cost over £6bn more, and that figure is about handling costs rather than compensation.

Who is in scope

The eligible group is large. The FCA's claims page puts the window at agreements taken out between 6 April 2007 and 1 November 2024, and estimates that 37% of agreements made at the time are eligible, which it puts at around 12.1 million agreements.

Two exclusions catch people out. Personal contract hire (PCH) is not covered, because it is leasing rather than an agreement to buy. Neither are agreements where a complaint has already been decided by the ombudsman or a court, or where compensation has already been accepted.

There is a further layer for anyone who thinks their agreement was unusual. Very high value loans are excluded, with a threshold that rises each year: £38,000 for 2008 agreements, £82,000 for 2023 and 2024. Agreements over £25,000 taken out before 6 April 2008 were unregulated and fall outside the scheme entirely.

The 36% cut for claims firms

Nothing about the delay changes the arithmetic on claims management companies (CMCs). The FCA states that a CMC may charge up to 36% of any compensation, that consumers do not need to use one, and that signing up with more than one CMC or law firm can mean paying multiple sets of fees.

It also warns that cancellation fees must be reasonable and reflect the work done, and that most car finance claims are still at an early stage. A large fee demand on a claim that has not been assessed is therefore worth challenging before it is paid. The regulator says it has seen poor practice from some CMCs and law firms, and it publishes a template letter for complaining about one.

What to do while you wait

Complain to the lender directly, which costs nothing. The FCA's claims page carries a searchable list of lenders with contact details and a template letter, and it has a section on protecting yourself from scams, which is the right frame for any unsolicited message promising a payout.

Keep the agreement paperwork and every piece of correspondence, including anything that arrived with the scheme's branding. The timing of a letter can matter later, and a lender's own records are easier to challenge when you have the dates.

Then leave it alone. There is no advantage to be had from complaining twice, and there is a real cost to signing with a second firm on the same claim. The scheme will not pay anybody while the tribunal is waiting to hear the case, whatever a claims firm's advert says.

The read

The timetable is now long enough to plan around. Parts of the scheme have been suspended since 2 July. The hearing runs from 16 to 26 February 2027. If the scheme is upheld and the judgment is not appealed, the FCA expects payments to begin in 2027, which in practice points to the second half of next year rather than the first.

For the used market, the effect is that a large number of drivers are carrying an unresolved claim alongside whatever they drive now. The FCA has told lenders to make financial provisions for the possibility that the scheme falls, and the size of those provisions is a number worth watching for anyone who cares what a monthly payment costs in 2027.

The forecourt has its own price signal in the meantime, with electric cars the one fuel type whose used values are rising. Different mechanism, same underlying question about what a car really costs to own across three years, which is the question a PCP agreement answers badly when nobody explains the commission behind it.