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Car finance compensation scheme faces challenge and delay
Consumer Voice announced a legal challenge to the FCA's central compensation scheme for mis-sold car finance, arguing the loss calculations are too narrow and that millions of mis-sold agreements would be excluded. The challenge could delay payouts due to begin this summer, while the FCA defends the scheme as the fastest and fairest way to compensate consumers.
Why It Matters
The outcome could affect millions of drivers who were mis-sold motor finance and may influence how regulatory schemes compensate consumers in the UK.
Timeline
9 Events
HD Law commentary on potential delay and outcomes
April 22, 2026
Kevin Durkin of HD Law, which represented Marcus Johnson in a Supreme Court case, said the scheme does not prioritise the public's needs and that judicial review could delay payouts but improve overall fairness.
Possible challenges from lenders and others speculated
April 22, 2026
The article notes there has been speculation that lenders or others affected could challenge the scheme, though such challenges would not necessarily be made public immediately.
FCA says the scheme is the quickest, fairest path to compensation
April 22, 2026
A FCA spokeswoman defended the scheme, saying it is the quickest and fairest way to compensate consumers and questioning the motive of consumer-champion groups attempting to delay payouts.
Deadline for legal challenges stated as Monday
April 22, 2026
The article notes that the deadline for any legal challenges to the scheme would be on Monday.
Paperwork for judicial challenge planned for Friday
April 22, 2026
Documentation for the challenge was expected to be filed with the Upper Tribunal on Friday.
Consumer Voice to challenge scheme at the Upper Tribunal
April 22, 2026
Consumer Voice announced it would apply to the Upper Tribunal to review the scheme’s design and redress calculations.
About 12.1 million agreements covered; 4.7 million not included
April 22, 2026
Consumer Voice said the scheme would cover about 12.1 million motor finance agreements, but around 4.7 million mis-sold agreements would not be included.
Central compensation scheme announced; payouts due to begin this summer
April 22, 2026
The FCA's central compensation scheme for mis-sold motor finance is reported to cost lenders about £9.1bn in total, with payouts averaging around £829 per person and payouts expected to begin this summer.
FCA bans discretionary commission arrangements (DCAs) in car finance
2021
The FCA banned deals where car dealers received commissions from lenders based on the interest rate charged to customers, known as discretionary commission arrangements (DCAs), which were often not disclosed.