The FCA promised millions of motor finance claims would be paid out this year. Its own scheme has been suspended since July, and nobody gets paid until a tribunal rules, at the earliest in 2027.
Estimated reading time: 6 minutes
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In short. The FCA's policy statement launching its motor finance redress scheme said it would "put £7.5bn back in people's pockets, with millions of claims paid out this year and the vast majority settled by the end of 2027" [1]. Nine months on, the FCA's own statement of 13 October 2026 confirms the scheme has been "partially suspended" since a legal challenge began, that lenders "do not need to calculate or pay compensation" under it, and that the Upper Tribunal will not hear the case until 16 to 26 February 2027 [2]. Two documented mistakes: four stars.
An estimated 12.1 million car finance agreements are eligible for compensation under the scheme, people who bought a car, van or motorbike on finance between 2007 and 2024 and were not properly told about commission arrangements between their lender and broker [3]. The Financial Conduct Authority built an industry-wide scheme specifically so those millions would not have to fight their own case through the Financial Ombudsman Service or the courts [1]. Nobody disputes that the underlying unfairness happened; the Supreme Court and High Court both found firms broke the rules in force at the time [4]. The question this piece tests is narrower: does the scheme the FCA built match the timetable and the numbers it published for itself.
What the FCA promised when it launched the scheme
PS26/3, the FCA's final policy statement on the motor finance consumer redress scheme, was first published on 29 March 2026. Its opening summary is unambiguous: "The final scheme is fair to consumers and proportionate for firms. It will put £7.5bn back in people's pockets, with millions of claims paid out this year and the vast majority settled by the end of 2027" [1], page 5, paragraph 1.10. The next paragraph adds the urgency: "This is an opportunity to draw a line under the failings of the past and support a healthy motor finance market for the future," and says plainly that "payouts must not be delayed any longer" [1], page 5, paragraph 1.11. Firms were given an implementation window running to 30 June 2026 for loans from April 2014 and 31 August 2026 for older agreements, after which the scheme was meant to be operating [5].
"This year" meant 2026. The statement was published with eight months of 2026 still to run.
What the FCA's own later statements confirm
The scheme's own page-update log tells the story from there. On 1 May 2026, five weeks after the final policy was published, the FCA logged that "our compensation scheme has been legally challenged. We will defend it robustly as lawful and the best way to resolve such a widespread, long-running and complex issue" [4]. On 2 July 2026, the Upper Tribunal "made an order suspending parts of the scheme on terms agreed by us with the 4 challengers" [4], four lenders and a consumer group that between them persuaded the Tribunal to pause the scheme before a single payment had been confirmed under it.
The FCA's newest statement, published 13 October 2026, sets out where that leaves things: "The scheme is currently partially suspended. However, firms must keep preparing for the scheme and progress complaints as far as possible" [2]. The same statement is explicit about what that means for anyone owed money: "Until the legal process concludes, lenders do not need to calculate or pay compensation under the scheme" [2]. The Upper Tribunal's own directions order, issued after a hearing on 5 and 6 October 2026, lists the final hearing of the substantive challenge as "9 days commencing 16 February 2027 with an additional four days of judicial pre-reading" [6], with judgment expected only "in the following months" after that [3]. With under three months of 2026 left and no lender under any obligation to pay a single claim until that process ends, PS26/3's "millions of claims paid out this year" is no longer achievable on the FCA's own account of its own scheme.
The FCA's live consumer page is, to its credit, now honest about the revised timetable: "If the scheme is upheld, and the judgment isn't appealed, we expect payments under the scheme to begin in 2027" [3]. That sentence, current as of this check, is the quiet correction the March policy statement itself has never carried.
The figures nobody has reconciled
The FCA's consumer page states that "around 12.1 million agreements" are eligible and that people getting compensation will receive "an average of around £830 per agreement" [3]. Multiplied out, that is just over £10 billion, roughly a third more than the £7.5bn headline figure PS26/3 gave the scheme in March [1]. Neither page explains the gap. PS26/3's own page-update log records only "minor correction on page 62 of PS PDF" since publication, nothing describing a revision to the headline total [5]. A reader relying on either figure, both still live on fca.org.uk, has no way to know from the FCA's own pages which number, if either, is still accurate.
What the Tribunal is actually being asked to rule on
The FCA's 13 October statement describes its own scheme as "the quickest, fairest and most efficient way to compensate consumers" and says it "will defend it robustly" [2]. The Tribunal's own directions order shows what "defend" will actually involve. It grants the lenders permission to call expert economic evidence on "whether there is evidence to support the view that the existence or inadequate disclosure of each Relevant Arrangement... results in harm to consumers" and on "whether the Schemes could readily have been modified, in order more accurately to target any unfairness, harm or loss" [6]. That is not a dispute about process or paperwork; it is the Tribunal agreeing to examine whether the FCA's own harm assessment, the foundation the whole £7.5bn-or-£10bn figure rests on, holds up. The same statement warns firms to plan for the scenario where the scheme "or parts of it are quashed", in which case "there may be no motor finance compensation scheme and no complaint handling pause" at all [2]. The protection millions of consumers currently have, a pause on normal complaint handling while the scheme is sorted out, is itself one of the things on the table in February.
Credit where due
The FCA has not gone quiet since the challenge began. Every stage, the 1 May challenge, the 2 July suspension, the 13 October hearing date, has been logged publicly and promptly on both the firm and consumer pages, with plain-English factsheets in English and Welsh for firms to use with worried customers [4]. Firms are still required to keep gathering data, handling non-scheme complaints and reporting to the regulator; the suspension is partial, not a shutdown [4]. And the scheme itself, before the challenge, was built on genuine consultation: "most respondents to our consultation agreed that an industry-wide scheme, free for consumers to use, would be the best, most efficient way to compensate consumers" [5]. The design was not rushed or unpopular; it is the timetable the FCA put its own name to that has not survived contact with a legal challenge it says it did not expect to lose.
The claims, tested
| The document's own words | What the record shows | Verdict |
|---|---|---|
| PS26/3, 29 March 2026, page 5: "millions of claims paid out this year and the vast majority settled by the end of 2027"; "payouts must not be delayed any longer" [1] | The FCA's own 13 October 2026 statement confirms lenders "do not need to calculate or pay compensation" until a legal process that will not be heard until 16-26 February 2027, with judgment "in the following months" after that [2] [6] | With under three months of 2026 left and zero claims legally payable, the 2026 promise is broken |
| PS26/3, 29 March 2026, page 5: the scheme "will put £7.5bn back in people's pockets" [1] | The FCA's own live consumer page: "around 12.1 million agreements" eligible at "an average of around £830 per agreement" [3], which multiplies to just over £10bn, about a third higher, with no reconciliation published anywhere | Two FCA figures for the same scheme, both still live, do not match |
Verdict
Four stars, two documented mistakes. The redress scheme itself answers a real wrong, confirmed by the Supreme Court and High Court, and the design process behind it was genuinely consultative. What has not held up is the FCA's own account of its own timetable and its own numbers. "Millions of claims paid out this year" was a promise the FCA made about 2026 in March 2026; by October, the FCA's own statements show that promise was already impossible to keep, and its own consumer page has quietly moved the goalposts to 2027 without PS26/3 itself ever being corrected. The £7.5bn headline figure and the £10bn the FCA's own current numbers imply sit on the same website, unreconciled. A scheme built to spare 12.1 million people from a confusing fight with their lender should not leave them checking two FCA pages that disagree with each other and a policy statement that disagrees with both.
The star score counts two documented mistakes: PS26/3 (29 March 2026) promised millions of claims would be paid out in 2026, but the FCA's own 13 October 2026 statement and the Upper Tribunal's own directions order confirm no claim can legally be paid until a hearing that does not take place until February 2027 at the earliest, making the 2026 promise unachievable; and PS26/3's £7.5bn headline figure has never been reconciled with the FCA's own live estimate of 12.1 million eligible agreements at an average of £830 each, which multiplies to just over £10bn. This piece makes no finding about the conduct of any named individual; it describes gaps between the FCA's own published figures and statements, not the performance of any person who drafted or signed them. The legal challenge itself is an ordinary regulatory appeal before the Upper Tribunal, not a finding of wrongdoing by the FCA or the challenging firms. All sources below were fetched directly on 14 October 2026 and returned HTTP 200; the PS26/3 PDF (584 pages) and the Upper Tribunal directions order were both read in full for the passages quoted.
Sources
- PS26/3: Motor finance consumer redress scheme (PDF), Financial Conduct Authority, first published 29 March 2026
- Motor finance legal challenge to be heard in February 2027, Financial Conduct Authority, published 13 October 2026
- Car finance claims, Financial Conduct Authority, last updated 13 October 2026
- Information for firms on motor finance complaints, Financial Conduct Authority, last updated 13 October 2026
- PS26/3: Motor finance consumer redress scheme, Financial Conduct Authority, first published 29 March 2026, last updated 3 July 2026
- Directions, Upper Tribunal Tax and Chancery Chamber, UT-2026-000045 to UT-2026-000048 (PDF), issued following a hearing on 5-6 October 2026