Car finance payouts face February court hearing

The legal challenge to the UK car finance compensation scheme will be heard from 16 to 26 February 2027, the Financial Conduct Authority (FCA) said on 13 October. Several lenders and a consumer group have challenged the scheme in the Upper Tribunal. A judgment is expected in the following months, not necessarily on the final day of the hearing.

Who may be affected

The scheme may cover finance agreements for cars, motorbikes, vans and campervans entered into between 6 April 2007 and 1 November 2024. It concerns important information that customers were not told about their agreements, including some broker commission arrangements that could affect the cost of credit. An agreement within that period does not automatically qualify. Eligibility depends on its terms. Personal Contract Hire leases and some business agreements are outside the scheme.

Parts of the scheme are suspended while the challenge proceeds. Lenders do not have to calculate or pay compensation under it until the legal process ends. If the scheme is upheld and the judgment is not appealed, the FCA expects payments to start in 2027. That is an expectation, not a payment date for an individual claim.

What to do now

1. Find your agreement and identify the lender, the firm that provided the finance. If you no longer have the paperwork, check old bank statements, ask the dealer or look at your credit file.
2. If you are concerned about undisclosed commission or other important terms, complain directly to the lender. The FCA provides lender contact details and a complaint template. This is free, and you do not need to wait for the hearing.
3. If you have already complained, keep your submission and any replies. A lender may tell you that no compensation is owed before the court case ends. Silence does not mean that a payout is guaranteed.
4. Be cautious about claims firms or lawyers promising to recover money. You do not need one to complain for free; their fees could take up to 36% of compensation.

If you disagree with a lender’s final response, check the deadline in its letter for referring the matter to the free Financial Ombudsman Service. The position may change after the judgment, so use the FCA page for updates.

Official sources: the FCA’s hearing announcement, consumer claims guide and lender guidance. Checked 14 October 2026.