FCA Motor Finance Compensation Update: What the February 2027 Hearing Means for Your PCP Claim

The legal challenge to the Financial Conduct Authority’s (FCA) car finance compensation scheme is due to be heard in February 2027. This means drivers may have to wait longer to find out whether they qualify for compensation.

If you have already made a claim, your complaint should remain open. If you have not complained yet, you can still contact your lender directly and make a complaint for free.

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

The FCA has introduced a compensation scheme for some drivers who may have been treated unfairly when taking out car finance. It covers certain Personal Contract Purchase (PCP) and Hire Purchase agreements taken out between 6 April 2007 and 1 November 2024.

According to this guide, the scheme has faced legal challenges, and parts of it have been temporarily suspended. The Upper Tribunal will hear the case from 16 February to 3 March 2027. The decision will help determine whether the compensation scheme can continue as planned.

Who is challenging the scheme?

Three finance companies, Volkswagen Financial Services, Mercedes-Benz Financial Services and Crédit Agricole Auto Finance, are challenging the scheme. Consumer Voice, represented by Courmacs Legal, is also involved in the legal challenge.

They are asking the Tribunal to consider whether the FCA’s compensation scheme is lawful. The FCA has said it will defend the scheme and wants to ensure that affected customers receive fair compensation.

What does a partial suspension mean?

A partial suspension means the scheme has not been completely stopped, but some parts cannot move forward yet.

Lenders do not currently have to calculate or pay compensation under the scheme while the legal challenge is ongoing. However, they are still expected to review complaints, collect information about commission paid to car dealers and brokers, and contact some customers who are not eligible for compensation.

This means work on complaints can continue, even though payments are delayed.

When will PCP compensation be paid?

Compensation payments under the scheme cannot be made until the legal process has finished. A decision is expected in the months following the Tribunal hearing.

The FCA hopes payments can begin in 2027 if the scheme is upheld and the decision is not appealed. However, no exact payment date has been confirmed.

If the Tribunal rules against the scheme, either fully or partly, the FCA will need to decide what happens next. One possibility is for lenders to deal with complaints through their usual processes. Creating a new compensation scheme could delay payments until 2028 or later.

I have already complained. What happens to my complaint now?

If you have already made a complaint, it should remain open with your lender. You do not need to submit another complaint just because the legal hearing has been delayed.

Your lender may continue reviewing your agreement, even if you have not received an update. Make sure they have your current contact details so they can reach you when there is news.

You should also continue making your car finance payments as agreed. Making a complaint does not cancel your finance agreement or remove your responsibility to pay what you owe.

Will my lender contact me before the hearing?

Your lender may contact you before the hearing if it decides you are not entitled to compensation. However, some customers may not receive an update until the legal process has finished.

For certain complaints, the FCA has set deadlines for lenders to inform customers who are not owed compensation. If your agreement started on or after 1 April 2014 and you complained by 30 June 2026, the deadline is 18 November 2026. If your agreement started before 1 April 2014 and you complained by 31 August 2026, the deadline is 18 January 2027.

For complaints made later, lenders should usually respond within five months, although exceptions apply.

If you have not received a letter, it does not automatically mean you will receive compensation or that your complaint has been rejected. If your lender says you are not entitled to compensation and you disagree, you can ask it to reconsider. If you remain unhappy with the outcome, you may be able to take your complaint to the Financial Ombudsman Service, which is free to use.

I have not complained yet. Should I still make a car finance complaint?

Yes. If you believe your car finance agreement may have involved unfair commission arrangements, you can still complain to your lender now. You do not need to wait for the February 2027 hearing.

You can make a car finance commission complaint yourself for free, even if the compensation scheme is currently delayed. The original FCA timetable included 31 August 2027 as the deadline for joining the scheme, but the legal challenge could affect the arrangements and deadlines. It is sensible to raise your complaint as soon as possible rather than assume the original deadline will remain unchanged.

If you have lost your paperwork or cannot remember which company provided your finance, you can contact the lender or ask for help identifying your agreement.

What does the February 2027 hearing mean for your PCP claim?

The hearing provides a clearer idea of when the legal issues may be resolved, but it also means compensation could take longer to arrive.

If you have already complained, your complaint should remain open. If you have not complained, you can still do so directly with your lender without paying a claims company.

The next important step is the Tribunal’s decision, which is expected in the months after the hearing. This will help determine whether the FCA’s scheme can continue as planned or whether further changes will be needed.

For now, keep your finance payments up to date, make sure your contact details are correct and keep copies of any letters or emails about your complaint. Most importantly, do not assume that the delay means you are not eligible for compensation.