The FCA Redress scheme designed to compensate millions of drivers who may have been overcharged on their car finance agreements, has now been legally challenged from two opposing sides. While this may introduce delays, it could also have a direct impact on how much compensation consumers ultimately receive.
What’s Happening?
A consumer organisation, Consumer Voice, has applied to the Upper Tribunal arguing that the level of compensation set by the FCA is too low. Their position is that consumers may be missing out on hundreds of pounds in additional redress.
At the same time, several major lenders, including Mercedes-Benz Financial Services and Volkswagen Financial Services, have challenged the scheme from the opposite direction, arguing that the proposed compensation framework is too costly.
These competing legal challenges mean the scheme is now under further scrutiny before it can be fully implemented.
What This Means for Claimants
The most immediate impact is likely to be some delay to payouts while the legal process unfolds.
However, there is also a potential upside. If the Consumer Voice challenge is successful, compensation levels could increase beyond the current average estimate of £829.
In the meantime, it’s important to remember that your compensation is not standing still.
Lenders are required to pay interest on the amount owed to you—at a minimum rate of 3% per year, from the date you were overcharged until the date you are paid. This means that the longer the process takes, the more your total compensation could grow.
When Will Compensation Be Paid?
Bott and Co remains optimistic that compensation will still begin to be paid in 2026.
The FCA has indicated that it will provide further guidance shortly. Our team is monitoring developments daily so we can take immediate action on behalf of our clients as soon as there is clarity.
Do Claimants Need to Do Anything?
No: If Bott and Co are handling your claim, everything is already in place.
Your complaint has been submitted, your claim is registered, and there is nothing further you need to do at this stage.
We strongly advise that you do not instruct another firm. Doing so will not speed up your claim and could potentially cause delays.
If your lender contacts you to confirm representation, simply state that Bott and Co Solicitors is acting on your behalf.