FCA compensation scheme delayed after legal challenge
The Financial Conduct Authority’s compensation scheme for drivers who were mis-sold car finance has been delayed.
Up to 12 million drivers are expected to be due about £829 in compensation, with payouts originally expected to begin this autumn.
However, Volkswagen Financial Services, Mercedes Benz Financial Services, and Credit Agricole Auto Finance have challenged the scheme and the UK’s Upper Tribunal has agreed to hear their arguments in either December or February.
The Finance & Leasing Association said: “The FLA welcomes the Upper Tribunal’s decision to partially suspend elements of the FCA motor finance compensation scheme until it has determined the legal challenges before it.
“The FLA continues to work closely with its members and the FCA to ensure the scheme is ready to be implemented. In the meantime, firms will continue preparing for the scheme and meeting the requirements that remain in force, while the Tribunal considers the appeals.
“Although the partial suspension means compensation payments cannot begin until the legal process has concluded, it provides greater certainty for firms and consumers, avoids work that may need to be repeated if the challenges succeed, and allows the legal issues to be resolved before the scheme is fully implemented.”
Sue Robinson, chief executive of National Franchised Dealers Association, added:
“The Upper Tribunal’s decision to grant a partial suspension provides an essential operational pause for our members. We encourage Dealerships to remain highly proactive in managing customer inquiries and maintaining precise historic records. Long-term certainty ensures that businesses and consumers alike can plan for the future with confidence.”
