Motor finance legal battle scheduled for February 2027

Summarised from 2 outlets · Updated 13 Oct, 10:44 · Archive

The FCA will face legal challenges to its motor finance redress scheme in February 2027 from three lenders and a consumer advocacy group.

The Financial Conduct Authority will defend its motor finance redress scheme at the Upper Tribunal between 16 and 26 February 2027. The hearing will involve legal challenges from three captive lenders—Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance—as well as the advocacy group Consumer Voice.

The FCA suspended its redress scheme in July following widespread criticism, then published revised proposals at the end of March. Under the finalised scheme, lenders face £9.1bn in redress costs, down from an earlier estimate, after the number of qualifying agreements was reduced to 12.1 million from 14.2 million. The scheme followed a Supreme Court ruling that partially overturned a landmark decision on car finance, finding that undisclosed commissions created an 'unfair relationship' in one case but rejecting claims that hidden commissions were automatically unlawful.

Captive lenders have argued the FCA's scheme forces an unlawful blanket assumption that most customers suffered financial loss if their commissions were not clearly disclosed. Volkswagen Financial Services has set aside £725m for expected expenses under the scheme, according to recently filed accounts.

How it is being reported

• Motor finance compensation scheme set for legal challenge next FebruaryThe upper tribunal will hear the challenges from three lenders and the Consumer Voice advocacy group between February 16 and February 26.Evening Standard · 13 Oct, 10:33
• Motor finance legal battle set for February 2027The City watchdog has confirmed that the legal battle over its motor finance redress scheme will take place early next year, following widespread backlash against its multi-billion-pound programme. The Financial Conduct Authority (FCA) will face challenges from three lenders, Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance, as well as the advocacy [...]City AM · 13 Oct, 10:01

In this story: Financial Conduct Authority · Volkswagen Financial Services · Mercedes-Benz Financial Services · Crédit Agricole Auto Finance · Consumer Voice · Upper Tribunal

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