Motor finance scheme partially suspended
Executive Summary
The Upper Tribunal has ordered a **partial suspension** of the FCA’s motor finance consumer redress scheme rules, primarily pausing redress calculation, payment and compensation communications while legal challenges are heard. Compliance teams at motor finance lenders and brokers must now operate under a split regime: preparatory and data‑gathering obligations under PS26/3 remain in force, but scheme‑timetable obligations on paying and notifying compensation are paused until the Tribunal process concludes.
What Changed
- - Parts of the FCA motor finance consumer redress scheme under PS26/3 are formally suspended by order of the Upper Tribunal, on terms agreed between the FCA and four challengers (Consumer Voice/Courmacs Legal, Volkswagen Financial Services, Mercedes‑
- During the suspension, firms are not required to calculate redress, pay compensation, or send communications about compensation owed under the scheme according to the original timetable.
- All non‑suspended rules remain fully applicable, including duties to identify in‑scope complaints and agreements, gather commission and disclosure data (including from brokers), and maintain records.
- Lenders must continue to identify relevant complaints and agreements falling within scheme scope (motor finance agreements between 2007 and 2024 with potentially unfair commission arrangements).
- Firms must continue to gather data on commission arrangements and disclosure practices, including obtaining information from brokers and confirming where such information is not held.
- Firms must issue responses to complainants who are not owed compensation under the scheme, by the relevant scheme deadlines, subject to limited exceptions (time‑barred complaints and captive‑lender contractual‑tie cases).
Suggested Considerations
- Identify and maintain a complete inventory of motor finance complaints and agreements that fall within the scheme scope (regulated motor finance with relevant commission arrangements between April 2007 and 2024).
- Continue to gather, centralise and validate data on commission structures, commission levels, and disclosure practices for all in‑scope agreements, including by issuing targeted information requests to brokers and dealers.
- Implement internal workflows to ensure brokers respond to lenders’ information requests within one month, or formally confirm where requested documents or data are not held.
- Review and classify complaints to determine which consumers are not owed compensation under the scheme, including cases outside scope and those lacking discretionary, high or tied commission arrangements, and prepare appropriate communications.
- Assess complaints for time‑bar issues and apply the scheme’s limitation and out‑of‑time principles consistently, documenting rationale for any reliance on time‑bar to decline redress.
- Identify complaints involving contractual ties with captive lenders and determine whether the “captive lender” exception applies; record the legal and factual basis for concluding no unfair feature is present.
Key Dates
Compliance Impact
Non‑compliance with the remaining live scheme rules and complaint‑handling requirements exposes firms to supervisory intervention, possible enforcement action and heightened FOS risk, even during the suspension. Failures in data gathering, record‑keeping or timely communications to non‑compensated complainants will also materially increase operational, litigation and reputational risk once the Tri
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original FCA source before acting. Full disclaimer.
Summary
The Upper Tribunal has made an order suspending parts of the scheme. We set out what the partial suspension means for firms and consumers. The Upper Tribunal has confirmed it will hear the legal challenges to our motor finance scheme on 14 to 18 December 2026 or 16 to 26 February 2027. The final dates depend on whether any of those involved in the case apply for further expert opinion or disclosure of information, and whether any such application is successful.The Tribunal has also made an or...