If you financed a car, van or motorbike between 2007 and 2024, you have probably heard by now that you might be owed money. What you may not know is that, as of 2 July 2026, the scheme meant to pay that money out has been partially frozen by a tribunal — and nobody can say with certainty when, or whether, the cheques will actually arrive.
What actually changed on 2 July
The Financial Conduct Authority confirmed that the Upper Tribunal had suspended parts of its Motor Finance Consumer Redress Scheme, following an order agreed between the regulator and four parties who had legally challenged it: Consumer Voice, acting through Courmacs Legal, along with Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance. The challenge had been lodged on 1 May 2026, roughly five weeks after the FCA published the scheme's final rules. Until the Tribunal resolves the dispute, lenders do not have to calculate or pay any compensation. They must, however, keep complying with every part of the scheme that wasn't suspended, and the FCA has told firms to carry on with the background work — identifying which customers are likely to be owed money and working out how much — so that payments can start quickly if the scheme survives the legal challenge intact.
That's an important distinction, and it's easy to miss in headlines that simply say "car finance payouts delayed."
Nothing has been cancelled.
The scheme itself was never going to move fast. Under the FCA's original timetable, lenders had an implementation period running to 30 June 2026 for agreements covered by what the regulator calls Scheme 2, and to 31 August 2026 for the older agreements under Scheme 1 — time to build the systems needed to trawl through years of paperwork. After that, firms were due three months to tell anyone who had already complained whether they were owed anything, followed by up to six months to proactively contact everyone else who qualified but hadn't complained. Even on that original schedule, most people were never going to see money before 2027. The 2 July suspension pushes that further out, but it was always a multi-year process rather than a summer windfall.
How we got here
The regulatory chain that produced this scheme starts with a Supreme Court judgment. On 1 August 2025, the court ruled on three conjoined cases — Johnson v FirstRand Bank, Wrench v FirstRand Bank, and Hopcraft v Close Brothers, reported as [2025] UKSC 33. The judges rejected the broader argument that car dealers owed customers a fiduciary duty simply by arranging finance, which was a significant win for lenders and a much narrower outcome than the Court of Appeal had handed down the previous year. But Mr Johnson still won his individual case, and he won it on a different basis: under section 140A of the Consumer Credit Act 1974, which lets a court unwind a credit agreement if the relationship between borrower and lender was unfair. In his case, the dealer had earned a commission worth roughly 55% of the total credit charge, undisclosed, while paperwork misleadingly implied the dealer had shopped his loan around a panel of lenders. He got the commission back — £1,650.95, plus interest — and the FCA moved within two days to announce it would consult on an industry-wide redress scheme.
Discretionary commission arrangements, where a dealer could push up a customer's interest rate specifically to earn a bigger cut, had already been banned by the FCA back in January 2021. The redress scheme exists because millions of agreements sold before that ban never had their commission arrangements disclosed properly, and Johnson gave the FCA a legal hook to do something about the backlog. The regulator consulted through autumn 2025 under reference CP25/27, then published its final policy statement, PS26/3, on 30 March 2026 — barely three months before the Upper Tribunal intervened.
Who's actually covered
The scheme applies to agreements taken out between 6 April 2007 and 1 November 2024, split into two windows. Scheme 1 covers agreements from 6 April 2007 to 31 March 2014; Scheme 2 covers everything from 1 April 2014 to 1 November 2024, which is when the ban on discretionary commissions finally closed the loophole for good. Roughly 12.1 million agreements are currently judged eligible — down from the 14.2 million the FCA floated at consultation stage, after firms and trade bodies pushed back on scope. The regulator now estimates around £7.5 billion will be paid out to consumers, against a total scheme cost, including administration, of about £9.1 billion. The average individual payment is expected to land around £830, though anyone whose commission was unusually large relative to their loan — as in Johnson's case — could see considerably more.
Not every agreement qualifies, and this is where the scheme gets less generous than some headlines suggested last year. A loan with no commission at all, or one where the commission was fully and clearly disclosed at the point of sale, generally sits outside the scheme's scope. Age of the agreement matters too: anything before April 2007 falls outside the window the Financial Ombudsman Service can even consider, so it's excluded by definition rather than by choice.
What the suspension does — and doesn't — change for you
Practically, if you've already complained to your lender, that complaint still exists and still counts. What's paused is the calculation and payment of compensation while the Upper Tribunal works through the legal challenge, with a hearing pencilled in for 14–18 December 2026, or, if scheduling or evidence disputes push it back, 16–26 February 2027. Payouts that were originally pencilled in for the second half of 2026 are now realistically a 2027 story, assuming the scheme survives the challenge at all.
It would be easy to read the suspension as a sign the whole scheme is collapsing. It isn't quite that simple. The four challengers aren't arguing that no compensation should ever be paid — Volkswagen Financial Services and Mercedes-Benz Financial Services, in particular, are disputing specific mechanics of how the FCA calculated redress, not the underlying principle that some customers were treated unfairly. Lenders across the industry have already set aside provisions in their accounts for this liability; PPI-style write-downs of that scale don't get reversed lightly. Consumer Voice, by contrast, is pushing in the opposite direction, arguing the scheme is too narrow rather than too broad — which tells you the fight is over the size and shape of the payout, not whether one happens. The more likely outcome, in the view of most legal commentators tracking the case, is a scheme that emerges from the Tribunal process narrower or slower than PS26/3 promised — not one that vanishes entirely.
You still have deadlines to work with, and they matter more than the suspension does. Anyone who isn't proactively contacted by their lender can still complain directly, in writing, up until 31 August 2027. If you already believe you were affected but haven't heard anything from your lender, you don't have to wait for that letter — you can contact the lender yourself and ask for a review.
What to actually do now
Complain to your lender directly, and do it now rather than waiting for the legal position to settle. Submitting a complaint costs nothing and puts you in the queue regardless of how the Tribunal rules — if the scheme is upheld, your complaint has already started the clock; if it's narrowed, you'll at least know where you stand sooner than someone who waited.
- Work out which lender actually financed the deal — not the dealership you bought the car from, but the finance company named on the agreement, which the FCA's website has guidance on tracing if you've lost the paperwork.
- Check which window your agreement falls into: Scheme 1 (April 2007–March 2014) or Scheme 2 (April 2014–November 2024), since the timelines and evidence requirements differ slightly between the two.
- Write to the lender directly rather than going through a claims management company or solicitor.
That last point is worth being blunt about. Do not pay a claims management company to submit this complaint for you. Going direct to your lender is free, the process is the same one a CMC would follow on your behalf, and firms that charge for this service routinely take 30% or more of whatever compensation you're eventually owed. There is no expertise a CMC brings to a standard motor finance complaint that justifies giving up a third of an £830 average payout — and the FCA has said as much explicitly in its own consumer guidance.
If your lender turns you down, or you disagree with how much they've offered, you don't have to accept it. You can refer the case to the Financial Ombudsman Service free of charge, and the Ombudsman has said it will keep assessing whether firms are applying the scheme rules correctly regardless of what happens with the Tribunal challenge. Keep a copy of whatever you send, note the date, and treat your original complaint as your place in the queue — one that's still there no matter how long the lawyers take to argue about the rest.