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Regulator's car finance redress scheme faces further legal challenges – but it's still worth getting your complaint in ASAP

Aerial view of cars driving along the M6 motorway

Assistant Editor – News & Investigations

Created 30 April 2026 | Edited 5 May 2026

The financial regulator's major car finance mis-selling redress scheme, confirmed in March, will face legal challenges from three lenders, it's been confirmed. MoneySavingExpert.com founder Martin Lewis says some delays now look "inevitable" – but with lots still uncertain, it remains crucial to get your complaint in now, which you can do for FREE using our DIY car finance reclaim tool.

Regulator the Financial Conduct Authority (FCA) has confirmed the lenders involved are CA Auto Finance, Mercedes-Benz Financial Services, and Volkswagen Financial Services.

When we asked these lenders about the basis of their challenges, Mercedes-Benz and CA Auto Finance both said they couldn't comment on ongoing legal matters. Volkswagen told us it had "identified issues that require independent clarification" from the courts – though it wouldn't tell us what these were.

The news follows a separate challenge brought by organisation Consumer Voice, which is aiming to increase payouts for drivers.

Regulator to "defend scheme robustly"

In a statement published on Friday 1 May, the FCA said it had "engaged widely" in designing the scheme and had made changes to reflect feedback from both consumer groups and lenders, adding that it would "defend the scheme robustly" in court.

The regulator also reiterated that its advice for consumers is to complain directly to their lender, warning: "You do not need to use a law firm or claims management company, which may charge over 30% of any compensation."

Martin Lewis: 'Too early to say how long this could delay payouts'

Martin Lewis

MSE founder & chair

So it looks like in Car Wars, the industry fights back after all. I know what many people want to hear about is what this means and how long the delay will be. Me too. It's just too early to say.

A delay is now pretty nailed on; if the mass redress scheme continues, the 2026 payouts for those who complain may move, likely into 2027, for many. Yet much depends on when the courts decide to hear the case, whether there are appeals, and how judges order it to be heard. There are so many variables it is just unknown.

With three industry cases, in a way, this partially decreases the gamble Consumer Voice (a firm that works with claims law firms for engagement in group cases) was taking in challenging the FCA to push for increased repayments. Ultimately now, even without its case, delays looked inevitable – so if there are going to be delays, at least it means one possible outcome is increased payouts.

Car finance redress scheme need-to-knows

Details of the FCA's major car finance redress scheme were published in March 2026. Below are some of the key points from that initial announcement, though things could now change depending on how the various legal challenges play out.

There were due to be two separate redress schemes. One covering agreements between 6 April 2007 and 31 March 2014; and another covering agreements between 1 April 2014 and 1 November 2024.

This is because while the FCA does have the power to include agreements covering between 6 April 2007 and 31 March 2014, it was felt that this period could be subject to a legal challenge due to the age of the agreements involved. The idea was that if this happened, it could have seen redress for the later period, from 1 April 2014, continue.
Around 12.1 million agreements were to be eligible for compensation. Down from 14.2 million. This was due to the eligibility criteria being tightened.
The average typical payout per claim was due to be £830. Up from around £700. This is because the compensatory interest rate was higher than previously expected, at base rate plus 1%, with a new minimum of 3%. Plus, for cases before 2014, a change to the calculation meant you were due to be paid more.
The total amount to be paid out was expected to be £7.5 billion. Down from £8.2 billion. This is because there were more exclusions than previously, and the FCA assumed fewer people than first expected would claim.

To keep up to date with the latest news about the scheme, sign up to our weekly email or download the free MoneySavingExpert app from the Apple App Store or Google Play Store.