FCA motor finance legal challenge to be heard in February 2027: what it means for your PCP claim

• The Upper Tribunal will hear the legal challenges to the FCA's motor finance redress scheme between the 16th and 26th of February 2027, with a judgment expected in the following months.

• Until the legal process ends, lenders don't have to calculate or pay compensation under the scheme, but they are still being told to look into which complaints may be valid.

• You can complain to your lender yourself for free. If you'd rather have help checking your agreement, Claim-Smart can help.

After months of uncertainty over when the legal challenge to the FCA's motor finance compensation scheme would be heard, a date has finally been confirmed.

The hearing will take place between the 16th and 26th of February 2027, meaning thousands of drivers could be waiting longer to find out whether they're owed compensation.

So, what happens if you've already made a PCP claim? And is it still worth complaining if you haven't?

Want to understand where your PCP agreement stands while the case is heard? Claim-Smart can help you check your agreement and explain what the delay could mean for you.

What has happened with the FCA's motor finance scheme?

The Upper Tribunal, a court that hears challenges to regulators' decisions, has confirmed it will hear the case against the FCA's redress scheme between the 16th and 26th of February 2027.

The scheme covers compensation for some unfair commission arrangements on PCP and Hire Purchase agreements taken out between the 6th of April 2007 and 1st of November 2024. Parts of it have been on hold since the scheme was partially suspended in July.

Who is challenging the scheme?

Three lenders and one consumer organisation are challenging the scheme: Volkswagen Financial Services, Mercedes-Benz Financial Services, Crédit Agricole Auto Finance, and Consumer Voice, represented by Courmacs Legal.

The Tribunal will decide whether the scheme's rules are lawful, and the FCA has said it will defend the scheme.

What does "partially suspended" mean?

The scheme hasn't been stopped altogether. Lenders don't have to calculate or pay compensation while the legal challenge is ongoing, but there's still work they need to do behind the scenes.

Lenders don't currently have to work out or pay compensation under the scheme. They do still have to find relevant complaints, gather information about commission (including from the dealers and brokers who arranged the finance) and tell some people they are not owed compensation.

When will PCP compensation be paid?

Compensation can't be paid under the scheme until the legal process has finished, and a judgment is expected in the months after the February hearing.

Despite the later hearing date, the FCA still expects payments to start in 2027, provided the scheme isn't appealed. It hasn't said when the first payments would be made.

If the scheme is found to be unfair in whole or in part, the FCA will have to decide what to do next. It has said one option is asking lenders to handle complaints themselves, as building a new revised scheme could delay compensation until 2028 or later.

You can read more about whether any PCP claims are being paid yet.

I've already complained, what happens to my complaint now?

Your complaint stays open with your lender, and you don't need to do anything to keep it active.

Lenders are still reviewing agreements, even if you haven't heard much. Make sure your lender, or whoever is handling your complaint, has your current address, email and phone number so you know you’ll be kept informed of any updates.

Keep paying your finance as normal too. Your complaint is about how the agreement was sold, so it doesn't change what you owe. Our guide to checking where your complaint stands explains who to contact and what to ask.

Not sure what your lender's last letter means, or whether your complaint was received? Claim-Smart can help you follow it up and make sense of any updates.

Will my lender contact me before the hearing?

You might hear from your lender if they have decided you're not owed compensation, but many people won't hear anything until the legal process ends.

The FCA has kept these deadlines for telling people who are not owed compensation:

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

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

If you complained later, your lender should usually tell you within five months. These deadlines don't apply if your lender thinks your complaint was made too late, or in some cases where the lender, manufacturer and dealer were obviously linked, such as sharing a name.

Not getting a letter doesn't mean anything at this stage. If you're told you're not owed anything and think that's wrong, ask your lender to review it. If you're still unhappy, you can go to the Financial Ombudsman Service, a free, independent service that settles disputes with financial firms.

I haven't complained yet. Should I still make a car finance complaint?

Yes, if you think your agreement could be affected, you can complain now, and you can do it yourself for free.

Under the FCA's original timetable, the 31st of August 2027 was the deadline for opting into the scheme. With parts of it suspended, don't assume every deadline will stay the same, and there's no need to wait for the hearing before complaining.

Lost your paperwork, can't remember your lender, or would rather not handle the letters yourself? Claim-Smart can help you find your lender and check whether your PCP agreement is worth looking into.

So, what does the February 2027 hearing mean for your PCP claim?

It gives a clearer timeline, but it doesn't change what you need to do. Current complaints stay open, compensation can't be paid under the scheme until the legal process ends, and you can still complain to your lender for free.

Want to know whether your agreement could be worth a complaint, without dealing with the lender yourself? Get in touch with Claim-Smart to check your PCP agreement.

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