Car finance latest: Mass redress scheme legal challenge court date set for February 2027 – what it means for payouts

Martin Lewis: Legal challenge to be heard in February 2027

Commenting on the announcement, MoneySavingExpert.com (MSE) founder Martin Lewis said:

The decision follows a case management hearing held on Monday 5 and Tuesday 6 October 2026, which looked at when the full hearing should take place and what documents and expert evidence the different parties can rely on.

This means the alternative court date of 14 December 2026 has now been disregarded.

What a February 2027 hearing means for payouts

Lenders don't currently have to calculate or pay redress until the legal challenges are dealt with. With the full hearing now set to take place in February 2027, a judgement is expected in the months that follow, possibly by mid-April.

If the Financial Conduct Authority's (FCA's) scheme is:

• Upheld and the decision isn't appealed: the regulator still expects payments under the scheme to begin in 2027.

• Overturned in full or in part: the FCA will need to decide what to do next. If it decides to revise the scheme, this could face a fresh legal challenge and push compensation back until 2028 or beyond.

Despite the delay, lenders must continue preparing for the scheme and progressing complaints as far as possible while the legal challenge is ongoing.

It's still important to get your complaint in ASAP

Despite the legal challenges to the FCA's scheme, you should still get your complaint in ASAP if you're yet to do so. Putting in a complaint yourself likely means a quicker payout.

You don't need to use a claims firm or law firm to do this – you can complain directly to your lender for free. You can use our FREE DIY car finance reclaim tool to help.

If you've already signed up with a claims firm but you're unhappy with it, see our guide on how to complain.

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

Don't want to wait for a resolution? Settlements could be agreed sooner

The FCA also says it's talking to lenders about potentially making "full and final" settlement offers to affected motorists who would rather take compensation now as opposed to waiting for the outcome of the legal challenge.

Any offers would be optional for lenders, but the FCA has said it expects them to be in line with the amount outlined – an average £830 per unfair car finance agreement – under its current scheme. However, if you're offered one, you DON'T have to accept it.

We've not heard of any lenders making these offers yet, and the FCA hasn't published full details of how the process would work. We'll continue to monitor this situation.

Already complained? Your lender may soon contact you if it thinks you AREN'T due redress

While lenders don't currently have to calculate or pay compensation to people who are owed money under the scheme, some of those who WON'T be covered by the FCA's scheme could soon hear from their lender.

If your lender decides you're not owed compensation, it should tell you by:

• 18 November 2026 if your agreement began on or after 1 April 2014 and you complained by 30 June 2026.

• 18 January 2027 if your agreement began before 1 April 2014 and you complained by 31 August 2026.

If you complained after these dates above and aren't owed compensation, your lender should generally tell you within five months of receiving your complaint. For more detail on the timeframes, see the FCA's website.

There are exceptions. These deadlines don't apply if your lender thinks your complaint was made too late, or if your complaint involves an issue that's forming part of the ongoing legal challenge.

If your lender tells you that you are not owed compensation under the scheme rules or that your case falls outside of the scheme, and you believe it has made a mistake, you should ask your lender to review its decision. If you are still unhappy, you can refer the complaint to the free Financial Ombudsman Service. You can also consider whether to pursue a claim through the courts.

If you don't hear anything, it's likely – but not certain – that you're eligible for redress under the scheme, though until the ongoing legal challenges are resolved, it's impossible to know for sure.

Car finance redress – what's happened to date

Payouts were originally due to begin this July, but they were put on pause due to multiple challenges to the FCA's official redress scheme. Three of the challenges to the scheme are from car finance lenders: CA Auto Finance, Mercedes-Benz Financial Services, and Volkswagen Financial Services. The fourth is from organisation Consumer Voice, which is aiming to increase payouts for drivers.

At the time, the FCA said payouts wouldn't take place until at least November 2026.

It was then confirmed in July that the legal challenges wouldn't be heard until December 2026 or February 2027, meaning payouts wouldn't begin until at least 2027.

The legal challenge hearing has now been set for February 2027 – meaning payouts are unlikely to begin until 2027 at the earliest.