Why 12 Million Drivers Owed a Car Finance Payout Now Face a Wait Until 2027

Millions of drivers who were mis-sold car finance have been told to wait even longer for the money they are owed. The Financial Conduct Authority has paused large parts of its car finance redress scheme after four companies launched legal challenges, and payouts that were meant to start this year could now slip to 2027 or later. The average agreement is set to pay £829, and around 12.1 million agreements qualify, so the hold-up reaches almost anyone who bought a car on finance over the past two decades.

What the FCA Has Actually Paused

The regulator confirmed a partial suspension of the scheme it published earlier this year. In plain terms, lenders no longer have to pay compensation while a court fight plays out. Firms can keep preparing behind the scenes and can move complaints forward as far as the rules allow, and the FCA wants them to write to people who are not owed anything sooner rather than later.

The pause follows legal challenges from four parties: Consumer Voice, represented by Courmacs Legal, alongside Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance. The Upper Tribunal has ruled it will hear those challenges in December 2026 and February 2027, with a judgment expected in the months that follow. Until the case ends, no money has to change hands.

In its statement, the FCA said the partial suspension “enables firms to keep preparing for the scheme and progress complaints as far as possible, while avoiding work that may need to be repeated if the challenges succeed.” It added that the move “provides certainty for some consumers sooner, by requiring firms to tell complainants who are not owed compensation.”

Who Is Owed Money and How Much

The scheme covers car finance agreements signed between 6 April 2007 and 1 November 2024. The FCA has put the total bill at £9.1 billion across 12.1 million agreements, working out at an average of £829 each. Anyone who took out more than one qualifying deal could be owed more, as each agreement counts on its own.

Three groups of drivers fall inside the scheme. The first signed up to a discretionary commission arrangement, the practice at the heart of the scandal, where a lender let the dealer raise your interest rate to earn more commission. The second signed a deal with very high commission, defined as more than 35 per cent of the total cost of credit and 10 per cent of the loan. The third signed an agreement that handed the broker, usually the car dealer, exclusive rights to one lender. FCA chair Nikhil Rathi said many motor finance lenders “did not comply with the law or the rules”, and that customers deserve fair compensation now the legal position is clear.

The New Timeline and What Happens Next

The FCA first planned for drivers to start receiving money late in 2026, with most payments made by early 2028. That schedule has now gone. If the scheme survives the legal challenge, the regulator expects payments to begin again in 2027. If it has to rewrite the rules and that draws fresh challenges, compensation could be pushed back to “2028 and beyond”.

A few dates still stand. Lenders are expected to tell you if you are not owed compensation by 18 November 2026, provided your agreement began on or after 1 April 2014 and you complained by 30 June 2026. For older agreements that started before 1 April 2014 and were complained about by 31 August 2026, the deadline to be told you are ineligible is 18 January 2027. If the whole scheme is overturned, the FCA has said it might instead tell lenders to settle complaints one by one under the normal process, giving firms eight weeks to respond, with the Financial Ombudsman Service as a backstop for anyone treated unfairly.

Kevin Durkin, a lawyer at HD Law, said the pause leaves “millions of drivers in limbo” and warned there are serious doubts the scheme will ever come into force. He estimates that more than 45 per cent of claims will still need court action to be paid in full, as some fall outside the scheme, some are capped within it, and some are simply worth more than it will offer.

What to Do Now

You do not need to pay anyone to protect your position. Start by checking whether you bought a car on finance, such as a PCP or hire purchase deal, at any point from April 2007 to November 2024. If you have not already complained to your lender, you can do so directly and for free, which secures your place in the queue. Those who have already complained will be treated as opted in unless they say otherwise.

Steer clear of claims management companies and law firms for the standard scheme. The FCA has warned that using one could cost you up to 30 per cent of your payout, money you keep if you claim yourself. Dig out your finance paperwork or agreement number, keep it safe, and watch the post for a letter from your lender by the dates above. If you are told you are owed nothing and you disagree, you can take the case to the Financial Ombudsman Service. For anyone tempted to hold out for more, going to court can deliver a bigger sum, though the FCA points out that success is far from guaranteed and the process takes longer.

The headline for now is patience. The money has not been cancelled, and the FCA still wants to pay it. What has changed is the clock. A scheme that looked set to put hundreds of pounds back in drivers’ pockets this year is on hold, and the earliest realistic date for most payments has moved into 2027 at best.

How Much You Could Get, and How to Work It Out

The headline average of £829 hides a wide range. Your payout depends on the size of the loan, the interest rate you were charged and how much commission the dealer earned. A driver who financed a small used car with a modest loan might see a few hundred pounds, while someone who bought a large family car or a premium model on a long agreement with a heavily inflated rate could be owed well over a thousand. If you signed more than one qualifying deal over the years, each is assessed on its own, so the totals stack up.

To get a rough sense of your position, dig out the paperwork and look for three things: the amount you borrowed, the annual interest rate and any mention of commission paid to the dealer. Agreements with a discretionary commission arrangement, where the rate could be nudged up to earn the dealer more, are the clearest candidates. Newer deals from 2021 onward are less likely to qualify, as the FCA banned that practice in January 2021, so the scheme focuses on the years before then.

Keep your expectations grounded while the legal case runs. Nothing is paid until the challenge is resolved, and even a successful outcome would see money arrive in stages rather than all at once. The safest move is to log your complaint now, hold on to your records and wait for your lender to make contact. That costs nothing, protects your claim and keeps every penny of any eventual payout in your hands.

Sources:

• GB News: Millions of drivers face delays to receive £829 as FCA suspends car finance compensation scheme
• Auto Express: Car finance compensation scheme worth £8.2 billion announced by FCA
• Financial Conduct Authority: car finance complaints