The Financial Conduct Authority (FCA) has confirmed that parts of its proposed Motor Finance Consumer Redress Scheme have been temporarily suspended following legal challenges brought before the Upper Tribunal.
This means that, for now, lenders are generally not required to calculate or pay compensation under the FCA scheme.
We appreciate that this will be frustrating news for clients who have already been waiting for their claims to progress. However, your claim remains active and Bott and Co continues to act on your behalf.
Why Has The Scheme Been Suspended?
The FCA introduced its Motor Finance Consumer Redress Scheme earlier this year after the courts found that consumers had been treated unfairly in certain circumstances involving commission arrangements on motor finance agreements.
The FCA’s scheme was designed to provide compensation to millions of affected consumers.
However, four parties have brought legal challenges to the scheme. These include Volkswagen Financial Services, Mercedes-Benz Financial Services, Crédit Agricole Auto Finance and Consumer Voice.
The Upper Tribunal has confirmed that it will hear the legal challenges either:
- 14–18 December 2026, or
- 16–26 February 2027
The exact hearing date will depend on whether any further applications for expert evidence or disclosure are made.
The FCA has said that it will defend the scheme robustly and continues to believe that it is the quickest, fairest and most efficient way of compensating affected consumers.
What Does The Suspension Mean For Your Claim?
The most important point for Bott and Co clients is that the suspension does not mean your claim has been rejected or cancelled.
Instead, it means that certain parts of the FCA scheme cannot currently progress to the point where lenders calculate and pay compensation.
Lenders are still required to undertake important preparatory work, including identifying relevant agreements, gathering information about commission arrangements and disclosure, and dealing with certain complaints.
The FCA has also confirmed that firms must continue responding to complainants where they determine that no compensation is due under the scheme, subject to certain limited exceptions.
This means there can still be movement on individual claims while the wider legal challenge continues.
What Happens Next?
The next major milestone is the Upper Tribunal hearing.
Once the legal challenge has been heard, the Tribunal will consider whether the FCA’s redress scheme is lawful.
There are several possible outcomes.
The Tribunal could uphold the scheme, meaning the FCA can move forward with its compensation framework.
It could require changes to the scheme.
Or, if the challenges are successful, the FCA may need to reconsider how motor finance complaints and compensation are dealt with.
At this stage, we cannot say with certainty how long the process will take or when compensation payments will begin.
What we can say is that the FCA is continuing to prepare for the scheme and lenders are being required to do the same.
What Does This Mean For Bott And Co Clients?
If you have already instructed Bott and Co, you do not need to make a new claim or submit another complaint.
Your claim is already with us and our specialist motor finance team continues to monitor developments and take action where appropriate.
We are also continuing to engage with lenders and assess how the legal developments affect individual claims.
If we need anything from you, we will contact you directly.
Otherwise, there is no need for you to take any action at this stage.
Could Some Customers Still Receive Compensation Before The Legal Challenge Is Resolved?
Our previous update explained that some lenders had indicated they may be willing to settle certain complaints before the wider legal process had concluded.
The FCA’s partial suspension means lenders are not currently required to calculate or pay compensation under the suspended parts of the scheme. However, this does not necessarily prevent every lender from considering individual complaints or resolving matters outside the suspended scheme where appropriate.
If your lender contacts you directly, please do not accept or reject any offer without speaking to Bott and Co first.
Any offer should be carefully reviewed to establish whether it represents the compensation you may be entitled to receive.
If you receive correspondence from your lender, simply forward it to us and we will review it on your behalf.
You Do Not Need To Start Again
We understand that the changing timetable can be confusing, particularly when clients have already been waiting for some time.
The important thing to remember is that your claim has not disappeared. Bott and Co has already submitted your complaint and continues to act on your behalf.
You do not need to make a second claim with another firm, contact multiple claims companies or start the process again.
We will continue to monitor the legal proceedings and developments from the FCA and lenders.
We Will Keep You Updated
We know that many of our clients have been waiting a long time for answers.
While the latest legal challenge means that compensation payments under the FCA scheme are currently delayed, the process is continuing.
Our specialist motor finance team is monitoring developments closely and will continue to act in your interests.
Your claim remains safely with Bott and Co, and we will continue to keep you informed as the situation develops.