The Upper Tribunal has made an order that suspends parts of the FCA’s motor finance redress scheme. It is to hear the legal challenges to the scheme in either mid December 2026 or mid February 2027 – it cannot confirm this until it knows whether participants in the case will apply for further opinions or disclosures.
The FCA and the 4 commercial parties that raised the challenge have agreed the terms of a partial suspension.
Firms must continue to comply with all rules which aren’t suspended (such as continuing to identify relevant complaints and agreements, gathering information and responding to customers who are not owed compensation except if the reason is because the complaint was out of time or involved a contractual tie and the firm is relying on the “captive lender” exception). The FCA expects all lenders to keep complainants up to date, and for the lenders who challenged the scheme at least to explain to their complainants individually what is happening.
It also expects firms to continue their contingency planning, and reminds them that the complaints handling pause expired on 31 May so they should be progressing complaints entirely outside the scope of the scheme in the normal way. In terms of planning for the entire scheme being quashed, lenders need to be operationally and financially ready to resolve liabilities within statutory timeframes. The FCA has warned it will take all necessary action, including imposing business restrictions, if it doesn’t think firms have the right financial resources in place.
The upshot of the suspension is that if the scheme does end up being upheld and that decision is not appealed, payments can’t begin until 2027. If it is overturned in whole or in part, the FCA will need to decide what do to next.