FCA Pushes £7.5 Billion Car Finance Payout Back to 2027 for Millions

• The FCA’s £7.5 billion car finance redress scheme, meant to start paying out this year, has been pushed back after four separate legal challenges to how the regulator calculated compensation.
• A hearing is now expected in December 2026 or February 2027, with a judgment likely to follow months later, meaning payouts could realistically slip into 2027 even if the scheme is upheld in full.
• Drivers who took out car finance between 2007 and 2024 do not need to do anything to join the scheme, but should be wary of claims firms charging a fee for something that will arrive automatically and for free.

A £7.5 billion payout just slipped a year behind schedule

The Financial Conduct Authority published its final policy statement on the Motor Finance Consumer Redress Scheme on 30 March 2026, setting out plans to return an estimated £7.5 billion to drivers who were overcharged on car finance agreements between 2007 and 2024. Lenders were originally told to be ready to start calculating and paying compensation by the end of June 2026 for agreements from April 2014 onwards, and by the end of August 2026 for older agreements. Payouts were expected to begin flowing from July 2026.

That timetable has now collapsed. Four separate legal challenges to the scheme have been lodged, disputing how the FCA calculated compensation and which agreements should be covered. In response, the regulator has told lenders they do not need to calculate or pay any compensation until those challenges have been heard and resolved. A hearing is expected in either December 2026 or February 2027, with a judgment likely to follow some months after that. If the scheme survives the legal challenges intact, which is not guaranteed, compensation is now unlikely to start reaching drivers’ bank accounts until some point in 2027, roughly a year later than originally promised.

Why this scheme exists in the first place

The redress scheme grew out of widespread mis-selling in car finance, where dealers arranging a loan or a PCP agreement could receive a commission from the lender that was never disclosed to the customer, and in many cases that commission structure gave the dealer a direct financial incentive to push the customer onto a higher interest rate. Other drivers were affected by being offered only one lender rather than a genuine choice, or by having a PCP balloon payment explained poorly or not at all, or by add-on products included in the finance without clear consent. The FCA estimates the average successful claim under the scheme will be worth around £829, calculated as a blend of the customer’s estimated financial loss and the commission the lender paid to the dealer, plus interest, though individual payouts will vary considerably depending on the size and length of the original agreement.

What the delay actually means if you had car finance in this window

Nothing about the delay removes anyone’s eligibility. The scheme is designed to work automatically: lenders are required to review historic agreements and identify affected customers themselves, rather than requiring every driver to submit an individual complaint and prove their case. Anyone with a qualifying car finance agreement from April 2007 to November 2024 remains covered regardless of how long the legal process takes to resolve. What the delay changes is simply the timing, pushing an already slow process further out, and in the meantime it widens the opportunity for claims management companies to pressure drivers into signing up for a service that costs money to do something the FCA scheme will eventually do for free.

That distinction matters more while the scheme sits in legal limbo, not less. Claims firms typically take a percentage of any payout, sometimes as much as 30 percent plus VAT, in exchange for submitting a complaint on a customer’s behalf. With the FCA scheme covering most affected drivers automatically and at no cost, paying a claims firm for the same outcome means handing over a share of compensation unnecessarily. Drivers who are uncertain whether their own agreement qualifies can check directly with their lender or use the free tools published by the Financial Ombudsman Service and MoneySavingExpert, rather than responding to unsolicited calls or texts referencing the car finance scandal.

Why lenders themselves are not keen to move any faster than they have to

It is worth being clear about whose interests the delay serves. A legal challenge of this scale takes real money and real legal resource to bring, and the firms behind the four challenges are, in the main, lenders disputing either the scope of the scheme or the method the FCA used to calculate compensation, rather than consumer groups arguing the redress does not go far enough. Every month the scheme remains unresolved is a month lenders do not have to set aside provisions or pay out, which is one reason consumer advocates have been sceptical that the delay is purely a matter of due legal process. The FCA has publicly maintained that it expects the scheme to proceed broadly as designed once the challenges are resolved, but a regulator saying it expects to win a legal challenge is not the same as the challenge actually being dismissed, and drivers budgeting around an expected payout should treat 2027 as an estimate rather than a promise.

What to actually do while the legal challenges play out

For most affected drivers, the honest answer is that there is very little to actively do right now beyond keeping records. Lenders are expected to hold data on agreements going back to 2007, but a driver who kept their own paperwork, including the original finance agreement and any correspondence about commission or interest rate, is in a stronger position if a dispute arises later over whether a specific agreement qualifies. Checking that a current address is up to date with any lender from that period is also worth doing now, since compensation will eventually be paid automatically to the address or account on file rather than requiring drivers to come forward. Beyond that, the realistic position is to treat 2027 as the earliest likely date for any payment to land, and to be sceptical of anyone offering to speed that timeline up for a fee.

Sources:

• https://www.fca.org.uk/publication/policy/ps26-3.pdf
• https://www.moneysavingexpert.com/news/2026/05/car-finance-redress-delays-latest/
• https://www.mayerbrown.com/en/insights/publications/2026/04/fca-finalises-motor-finance-consumer-redress-scheme