The Financial Conduct Authority (FCA) has confirmed that millions of drivers waiting for compensation over car finance mis-selling will not receive payouts until at least 2027. The news marks yet another delay to a redress scheme that was originally expected to start paying out in July 2026.
According to the regulator, lenders now do not need to calculate or pay compensation until legal challenges against the FCA's official redress scheme have been fully heard. A hearing is currently scheduled for either December 2026 or February 2027, with a judgment expected several months later. This pushes any potential payments well into 2027 or even beyond.
Timeline slipped from July to 2027
The FCA had initially said payouts would begin in July 2026, but multiple legal challenges forced a pause. At that point, the regulator updated its guidance to say no compensation would be paid until at least November 2026. Now, with the courts yet to rule on the challenges, the FCA has pushed the earliest possible payment date back further to 2027.
The delays affect hundreds of thousands of motor finance customers who took out loans or hire purchase agreements before 2021, when commissions were often discretionary. The FCA has been investigating historic mis-selling, where brokers received higher commissions for arranging more expensive loans without properly disclosing the arrangements.
Survey reveals lack of consumer confidence
The FCA has also published new research showing that many consumers are still unsure how to claim. A survey commissioned by the regulator found that 27% of car finance customers lack confidence to make a complaint without using a claims management company (CMC) or law firm. This is despite the FCA offering free tools, including a template letter, to help people complain directly to their lender.
The same survey indicated that 59% of customers have either already made a claim or are considering doing so. A further 23% said they were unsure of their options. Encouragingly, more than 80% of those surveyed said the free template letter would make them more confident in complaining directly to their finance provider.
£2 million campaign urges free complaints
To tackle this lack of confidence, the FCA has launched a £2 million advertising campaign aimed at helping people feel able to complain without paying for third-party assistance. The campaign highlights that making a complaint is free, and that using a claims management company could cost customers a significant slice of any compensation.
The FCA has warned that customers do not need to pay anyone to claim compensation. Typical payouts are predicted to be around £829, though individual amounts will vary depending on the loan and the level of hidden commission.
FCA executive: 'Don't pay someone to make a complaint'
Sheree Howard, executive director at the FCA, said: “Many people who may be owed compensation aren’t sure where to start or don’t realise they don’t have to pay someone to make a complaint.”
“Our free tools are there to help people feel claim confident – so they can get any money owed back without it costing them a penny.” she added.
The FCA's advice is simple: motor finance customers should use the free resources available on the regulator's website, including the template letter, to submit a complaint directly to their lender. Even with the delay in payments, registering a complaint now ensures that customers are in the system and will benefit from any redress scheme once the legal challenges are resolved.
