Why millions of drivers face a longer wait for car finance compensation

Millions of motorists hoping for compensation over mis-sold car finance deals will have to wait even longer for payouts after a major legal battle was pushed back until next year.

The Financial Conduct Authority (FCA) has confirmed challenges to its proposed compensation scheme will now be heard by the Upper Tribunal between February 16 and February 26, 2027, rather than this year.

The delay centres on a proposed redress scheme that could see car finance firms pay out an estimated £9.1bn to customers who were wrongly sold motor finance agreements between 2007 and 2024.

Why is compensation being delayed?

Three major lenders, Volkswagen Financial Services, Mercedes-Benz Financial Services and Credit Agricole Auto Finance, are challenging the FCA’s plans in court.

Consumer campaign group Consumer Voice is also involved in the case. It believes the FCA’s payout rules could leave people with less than they are fairly owed.

Until the legal arguments are resolved, the watchdog’s compensation scheme remains partially on hold, meaning affected motorists are unlikely to receive any payouts before next year.

How many people could be affected?

The FCA estimates around 12.1 million car finance agreements could qualify for compensation under the scheme.

Average compensation has been estimated at around £829 per customer, although individual payouts would vary depending on the circumstances of each case.

What should drivers do now?

The FCA has told finance firms they must continue preparing for the compensation scheme and progress complaints where possible.

However, the regulator has also warned companies to prepare for the possibility that the courts could overturn its plans altogether, meaning there may ultimately be no industry-wide compensation scheme.

Why has the court case been pushed back?

According to Alex Neill, co-founder of Consumer Voice, a hearing previously expected in December 2026 has now been abandoned, with all sides blaming each other for the delay.

Consumer Voice says disputes over evidence disclosure and requests for additional data and expert analysis have contributed to the case slipping into next year.