Business · Companies · 2 hrs ago
UK car finance compensation payments delayed until 2027
The FCA says car finance compensation will not be paid before 2027 after legal challenges delayed its scheme.
Three lenders are challenging the plan in the UK, and the Upper Tribunal has agreed to hear their cases at a hearing scheduled for 16 to 26 February.
Lenders can pause calculations and payments until the legal process ends.
The scheme is intended to compensate drivers who were treated unfairly over commission payments in car finance deals, and millions had been expected to receive money.
If the scheme is overturned, up to 19 million complaints could be handled individually, a process the FCA estimates would take three years and cost lenders £6bn more.
The FCA says it will defend the scheme, while the industry is expected to cover the costs of any compensation programme.
The FCA says no car finance compensation will be paid before 2027 because of legal challenges to its scheme.
The UK’s Upper Tribunal has agreed to hear challenges from three lenders, with a hearing scheduled for 16 to 26 February.
The delay means lenders do not have to calculate or pay compensation under the scheme until the legal process concludes.
The FCA estimates that without a scheme, up to 19 million complaints could need to be handled individually, taking three years and costing lenders £6bn more.
- Who
- The FCA, car finance lenders and drivers owed compensation.
- What
- Compensation payments under the FCA scheme have been delayed until 2027 because of legal challenges.
- When
- No payments will be made before 2027. A tribunal hearing is scheduled for 16 to 26 February.
- Where
- The United Kingdom.
- Why
- Three lenders have challenged the scheme, and the legal process must conclude before lenders calculate or pay compensation.
The FCA
Volkswagen Financial Services, Mercedes Benz Financial Services, and Credit Agricole Auto Finance
Purpose of the scheme
The FCA
The FCA says it is the best way to resolve a widespread, long-running and complex issue.
Volkswagen Financial Services, Mercedes Benz Financial Services, and Credit Agricole Auto Finance
The three lenders have brought legal challenges to the scheme.
Legal position
The FCA
The FCA says it will defend the scheme as lawful.
Volkswagen Financial Services, Mercedes Benz Financial Services, and Credit Agricole Auto Finance
The lenders are challenging the scheme; their specific arguments are not stated.
The FCA confirmed that no compensation would be paid before 2027 because of legal challenges to the scheme.
The Upper Tribunal is scheduled to hear legal challenges to the scheme.
- Compensation payments
- None before 2027
- Lenders bringing challenges
- Volkswagen Financial Services; Mercedes Benz Financial Services; Credit Agricole Auto Finance
- Tribunal hearing
- 16 to 26 February
- Potential individual complaints without a scheme
- Up to 19 million
- Estimated additional lender costs without a scheme
- £6bn
What people are saying
too many people short-changed
defend the scheme robustly as lawful and the best way to resolve such a widespread, long running and complex issue
concerns
Sources
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