FCA's motor finance redress scheme faces Upper Tribunal challenge in early 2027

The Financial Conduct Authority’s motor-finance redress initiative is set to be examined by the Upper Tribunal’s Tax and Chancery Chamber between 16 and 26 February 2027. Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance, joined by the consumer advocacy group Consumer Voice, will challenge the regulator’s approach. After suspending the scheme in July due to widespread industry criticism, the FCA published final proposals that capped its exposure at £9.1 billion and lowered the count of qualifying agreements to 12.1 million.

The move follows a partial Supreme Court reversal of a prior landmark ruling, which affirmed that a single undisclosed commission could create an unfair relationship but rejected a blanket illegality for all hidden commissions. Captive lenders argue the FCA’s model assumes unlawful loss for most customers without sufficient clarity, while Consumer Voice accuses the Treasury of undue influence over the scheme. Former Chancellor Rachel Reeves had previously attempted to intervene in the Supreme Court case but was blocked by the judges.