Millions of drivers who were mis-sold a car loan are awaiting potential compensation of £830 from the UK's financial watchdog car finance redress scheme. The Financial Conduct Authority (FCA) was ready to begin handing out payouts in July but now it is facing legal challenges from one small consumer firm and three car finance firms.
Court hearing dates set
A hearing for the legal challenges against the FCA redress scheme was heard last week on Monday, October 5 and Tuesday, October 6 to determine when the full court hearing will take place determining when the payouts will begin.
The court case will either begin to be heard on December 14 2026 or February 16 2027. Knowing the date of when the case will be heard will help determine when drivers could start receiving compensation.
Potential payout timeline
If the legal challenge is rejected and not appealed, the FCA has said it expects payments under the scheme to begin in 2027. If the scheme is overturned in whole or in part, then the FCA will need to decide what to do next, which could see payouts delayed until 2028 or even later.
The authority is also talking to lenders about making "full and final" settlement offers to affected customers, allowing customers to take compensation now as opposed to waiting for the outcome of the legal challenge.
Compensation and deadlines
Compensation is expected to be an average of £830 per unfair car finance agreement under the current scheme.
Millions of drivers have already complained to their lenders and those who won't be covered by the redress scheme therefore not eligible to receive compensation could be told as soon as next month.
If your lender decides you're not owed compensation, it should tell you by:
- November 18 2026 if your agreement began on or after 1 April 2014 and you complained by 30 June 2026.
- January 18 2027 if your agreement began before 1 April 2014 and you complained by 31 August 2026.
Money Saving Expert has advised drivers that haven't complained already to do so as soon as possible. It said: "Despite the legal challenges to the FCA's scheme, you should still get your complaint in ASAP if you're yet to do so. Putting in a complaint yourself likely means a quicker payout."
"You don't need to use a claims firm or law firm to do this – you can complain directly to your lender for free."
