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The Upper Tribunal will hear legal challenges to the Financial Conduct Authority's (FCA) motor finance compensation scheme between 16 and 26 February 2027, with firms reminded that preparations must continue despite the ongoing proceedings.
The challenges have been brought by three lenders and Consumer Voice, represented by Courmacs Legal. The scheme remains partially suspended while the legal proceedings continue, but firms must still comply with the requirements that remain in force.
The FCA has highlighted three key messages for firms:
- Continue meeting existing obligations, including communicating with relevant customers where required and progressing complaints as far as possible.
- Maintain implementation preparations, while also considering alternative outcomes arising from the legal challenges.
- Prepare for the possibility of the scheme being overturned, in whole or in part. Firms would then need to be operationally and financially prepared to manage complaints through the usual complaint-handling process and within existing statutory timescales.
The FCA maintains that the compensation scheme offers the quickest, fairest and most efficient route to redress for affected consumers and intends to defend it before the Tribunal.
The regulator will continue to update its guidance for firms as the proceedings develop. Members should monitor the latest information and consider what the ongoing uncertainty means for their complaint-handling and implementation arrangements.
