Millions of Car Finance Drivers Told to Wait Until 2027 for Compensation

Millions of drivers who were mis-sold car finance commission have been told to keep waiting, again. The Financial Conduct Authority confirmed on 2 July that the courts will not hear the legal challenges to its redress scheme until December 2026 or February 2027 at the earliest, pushing any actual payments back into 2027.

The scheme was originally set to start paying out this July. The FCA then pushed that date to November 2026. Now the regulator says lenders do not have to calculate or pay a penny until the Upper Tribunal has ruled on four separate legal challenges brought by finance companies. Whichever way that ruling goes, a further appeal is possible, which could add months more on top.

Who is being kept waiting

The FCA has said around 14 million people took out car finance agreements between 6 April 2007 and 1 November 2024 that could be affected by hidden commission arrangements between lenders and dealers. Under the most common of these arrangements, known as a discretionary commission arrangement, the dealer earned more commission the higher the interest rate a customer was charged, and the customer was rarely told the deal worked this way. Roughly 12 million of those agreements are expected to fall within scope once the scheme takes effect.

Two separate schemes were set out when the FCA published its original plans in March 2026: one covering agreements from 6 April 2007 to 31 March 2014, and a second covering 1 April 2014 to 1 November 2024. The FCA has previously indicated compensation is likely to average a few hundred pounds per agreement, though drivers who kept a car on finance for several years at an inflated rate could recover a good deal more. Analysts and lenders themselves have put the total cost of redress across the industry anywhere between £9 billion and £18 billion, a range wide enough that lenders have strong reason to keep fighting it in court.

The scandal traces back to a 2021 ban on discretionary commission arrangements, followed by a wave of court cases brought by individual borrowers who argued they had been treated unfairly under the old rules. A Court of Appeal ruling in late 2024 found in favour of borrowers on several key points, and the Supreme Court largely upheld that finding in 2025, which is what forced the FCA to design an industry-wide redress scheme rather than leave the issue to be fought out one case at a time. Lenders responded by launching the four legal challenges now holding the entire scheme up.

Car dealers earned this commission on top of the arrangement fee they already charged for setting up the finance, and the practice was legal at the time it happened. What was not disclosed to most buyers was that the salesperson had a direct financial reason to push a higher interest rate onto them rather than the cheapest deal a lender would have accepted.

The FCA’s own working assumption is that around 44 percent of agreements in scope involved this kind of commission structure, though the real number affected will only become clear once lenders finish combing through more than a decade of paperwork.

Lenders can now tell you that you are not owed anything

Buried in the FCA’s latest update is a detail that has attracted far less coverage than the delay itself. Car finance firms have been instructed to write to some customers who have already complained but who the lender believes will not be covered by the scheme, telling them they are not due redress before the scheme has even been finalised by the courts.

If you complained on or after 1 July 2026, your lender should tell you within five months whether it thinks your case falls outside the scheme. Get that letter and disagree with it? You can ask the lender to review its own decision, and if you remain unhappy you can take the complaint to the Financial Ombudsman Service or pursue it through the small claims court. A rejection letter from a lender is not the final word on whether you are owed money.

What happens if the courts throw the scheme out

The four lenders challenging the scheme argue the FCA has overreached and that redress should be assessed case by case rather than through a blanket compensation scheme covering everyone automatically. If the challengers win, the FCA has said only that it will “need to decide what to do next,” language that leaves open the possibility of scrapping the mass redress approach entirely and forcing all 12 million affected drivers to bring an individual complaint instead.

That outcome would hit hardest the drivers who never get round to complaining, including people who are less likely to take on a large financial institution unprompted, whether that is down to age, illness, low confidence dealing with paperwork, or simply not knowing a claim exists. A mass redress scheme is designed to find and pay these people automatically, using the lender’s own records. An individual complaints process relies on the customer coming forward, and plenty never will.

The deadline that already applies

Whatever happens in court, the FCA has fixed 31 August 2027 as the deadline for consumers who were not proactively contacted by their lender to submit a complaint and keep their place in line. Sitting back and waiting for the legal fight to resolve itself before complaining, rather than getting a complaint in now, risks missing that window entirely if a lender never identifies you as an affected customer on its own.

The FCA has told firms to keep doing the background admin work regardless of the court timetable, including identifying affected customers and working out what any redress payment would look like, so that money can move quickly once a final decision is reached. That instruction only covers people the lender has already flagged. It does nothing for a driver whose old finance agreement has been missed, forgotten, or filed under a name and address that no longer matches DVLA or credit file records.

How to fight back now

You do not need to pay a claims management company a cut of your payout, and you do not need to wait for the courts to finish arguing before you act.

Check whether you had PCP or hire purchase finance on a car bought new or used between April 2007 and November 2024, whether or not you have sold the car in the years after, paid off the finance, or switched lenders. If you did, submit a free complaint directly to the lender rather than the dealership, using the templates and document-finding tools at moneysavingexpert.com/reclaim/reclaim-car-finance. You do not need your original paperwork close at hand, as lenders are required to hold records going back to when the agreement started.

If you already complained and have not heard back, do not chase the lender for a decision, as none can legally be given until the court challenges are resolved. Keep a copy of your complaint reference and the date you sent it, in case you need to escalate the matter later or prove you complained before the August 2027 cut-off. If you receive a letter saying your case is not covered, ask the lender to put its reasoning in writing and take the matter to the Financial Ombudsman Service if you disagree with the answer.

Steer clear of claims management firms and solicitors charging upwards of 30 percent of any payout for work you can do yourself for free in twenty minutes. The regulator and consumer groups agree that a direct complaint gets you exactly the same compensation as a paid claims firm, just without the fee taken off the top.

If you are unsure whether your old car finance deal even qualifies, check your credit file for any historic hire purchase or PCP agreements you might have forgotten about, especially from car dealerships that no longer trade under the same name. Many drivers who assume they never had “car finance” in the technical sense did, in fact, sign a regulated hire purchase agreement without realising it.

For more on how this scheme reached the current standstill, read our earlier coverage: Why 12 Million Drivers Owed a Car Finance Payout Now Face a Wait Until 2027.

Sources:

• https://www.fca.org.uk/news/statements/motor-finance-scheme-partially-suspended
• https://www.moneysavingexpert.com/news/2026/07/car-finance-redress-scheme-delayed-again/
• https://www.moneysavingexpert.com/reclaim/reclaim-car-finance/