Consumer Voice and three lenders are challenging the Financial Conduct Authority (FCA) redress scheme for undisclosed motor finance commissions in the Upper Tribunal. The scheme covers about 12.1 million agreements, and the tribunal has suspended its redress-calculation, payment, and communication deadlines pending the challenges. The main hearing is set for February 16 to March 3, 2027.
Latest development Oct 26, 2026
On October 26, 2026, the Financial Conduct Authority (FCA) announced that the Upper Tribunal had extended the hearing of the challenges to its motor finance redress scheme. The hearing, originally set for February 16 to 26, 2027, will now run from February 16 to March 3, 2027.
Why it matters
The Upper Tribunal will decide whether the Financial Conduct Authority’s redress scheme, covering about 12.1 million agreements, can proceed as designed. The ruling affects motor finance lenders and consumers and tests the limits of regulator-run redress schemes under section 404 of the Financial Services and Markets Act 2000.
Background
The dispute arises from undisclosed commissions that lenders paid to car dealers on motor finance agreements written between 2007 and 2024. In January 2024, the Financial Conduct Authority (FCA) opened a review of discretionary commission arrangements and paused complaint-handling deadlines. On October 25, 2024, the Court of Appeal found for consumers in Johnson, Wrench, and Hopcraft, ruling that dealers owed customers disclosure duties. On August 1, 2025, the UK Supreme Court rejected the fiduciary-duty and bribery routes to lender liability in Johnson v. FirstRand Bank Ltd [2025] UKSC 33. It upheld Johnson’s claim that his credit relationship was “unfair” under section 140A of the Consumer Credit Act 1974, opening a statutory path to mass redress.
The FCA consulted on an industry-wide redress scheme in October 2025 and confirmed it in policy statement PS26/3 in March 2026, with rules effective March 30, 2026. The scheme covers about 12.1 million agreements, with an estimated £7.5B in redress and a total industry cost of up to £9.1B. In May 2026, four challengers referred the scheme to the Upper Tribunal (Tax and Chancery Chamber) under section 404 of the Financial Services and Markets Act 2000. Consumer Voice, a claimant group, argues that the scheme under-compensates consumers by wrongly using Johnson as a benchmark. Lenders Volkswagen Financial Services, Mercedes-Benz Financial Services, and CA Auto Finance UK also challenge the scheme.
On July 1, 2026, the tribunal, on terms agreed with the FCA, suspended the scheme’s redress-calculation, payment, and communication deadlines pending the challenges. The tribunal also required anyone wishing to join the proceedings as an interested party to apply by August 4, 2026. On July 2, 2026, the FCA announced alternative hearing dates of December 14–18, 2026, or February 16–26, 2027, depending on any applications for further expert evidence or disclosure. In September 2026, the FCA filed grounds of response accusing Consumer Voice of not disclosing its litigation funding and its relationship with its solicitors, Courmacs Legal. Consumer Voice replied that the scheme under-compensates consumers and benefits lenders.
On October 13, 2026, the FCA confirmed a February 16–26, 2027, main hearing, following the tribunal’s disclosure and expert evidence rulings at the October 5–6 case management hearing. On October 26, 2026, the FCA announced that the tribunal had extended the hearing to run from February 16 to March 3, 2027. Payouts, once envisaged to run mostly through 2026–2027, now depend on the tribunal’s ruling, though firms must keep identifying eligible agreements and gathering commission data.
Timeline 14 events
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OrderTribunal extends February 2027 hearing to March 3
The FCA announced that the hearing of the scheme challenges, originally set for February 16–26, 2027, would now run from February 16 to March 3, 2027.
Motor finance legal challenge to be heard in February 2027Regulatory News: 28 October 2026 - CCTACar finance latest: Mass redress scheme legal challenge court date set for February 2027
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OrderTribunal confirms February 2027 hearing on scheme challenges
The rolled-up hearing of the four challenges was set for February 16 to 26, 2027, rather than the alternative December 2026 window. The tribunal fixed the dates after ruling on disclosure and expert evidence at the October case management hearing.
Motor finance legal challenge to be heard in February 2027FCA Motor Finance Scheme Dispute Delayed To February 2027Motor finance legal battle set for February 2027
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OrderUpper Tribunal holds case management hearing on scheme challenges
The hearing, on October 5–6, 2026, addressed disclosure and expert evidence. The tribunal was also to decide whether the main hearing would take place in December 2026 or February 2027.
FCA Motor Finance Redress Scheme: How lenders should prepare ahead of the October 2026 hearingMotor finance lenders urged to maintain redress preparations ahead of Tribunal hearingMotor finance hearing set to clarify dealers' redress preparation windowConsumer Voice CEO Mulls Car Loan Redress Shortcomings - Law360Motor Finance Claims: FCA Scheme, Legal Challenges & More
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FilingFCA and Consumer Voice exchange filings in the tribunal
The FCA filed grounds of response accusing Consumer Voice of not disclosing its litigation funding and relationship with Courmacs Legal. Consumer Voice replied that the FCA’s redress scheme under-compensates consumers and benefits lenders.
Motor finance row heats up as FCA slams law firm's motivesParties at war in motor finance compensation scheme legal challenge as accusations made by Consumer Voice and FCAFCA accused of putting lenders ahead of consumers in £9.1bn motor finance compensation scheme
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OrderFCA announces hearing dates and full list of scheme challengers
The FCA announced Upper Tribunal hearing dates of December 14–18, 2026, or February 16–26, 2027. It named the challengers as Consumer Voice, CA Auto Finance UK, Volkswagen Financial Services, and Mercedes-Benz Financial Services.
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OrderTribunal sets deadline for interested parties to join proceedings
The Upper Tribunal’s directions order required anyone wishing to join the challenge proceedings as an interested party to apply by August 4, 2026.
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OrderUpper Tribunal partially suspends the scheme
The stay covered redress-calculation, payment, and communication obligations pending the challenges. The tribunal listed hearings for December 14–18, 2026, or February 16–26, 2027.
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FilingFour challenges filed in the Upper Tribunal
Consumer Voice argued that the scheme under-compensates consumers. Volkswagen Financial Services, Mercedes-Benz Financial Services, and CA Auto Finance UK challenged it as lenders.
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OrderConsumer Voice sends pre-action letter challenging scheme
Consumer Voice, represented by Courmacs Legal Ltd, signaled its intention to challenge the FCA’s motor finance redress scheme.
Dame Meg Hillier MP Chair of the Treasury Committee House of Commons LondonFCA redress scheme faces legal battle over motor finance claims as Consumer Voice group applies to Upper Tribunal for review
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OtherFCA confirms the redress scheme (PS26/3)
The final rules took effect on March 30, 2026. They cover about 12.1 million agreements and an estimated £7.5B in redress, with staged deadlines of June 30 and August 31, 2026.
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OrderFCA consults on an industry-wide redress scheme
The consultation proposed compensation for undisclosed discretionary and high-commission arrangements on 2007–2024 agreements.
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JudgmentSupreme Court hands down Johnson v. FirstRand [2025] UKSC 33
The court rejected fiduciary and bribery liability for undisclosed commissions. It upheld Johnson’s unfair-relationship claim under section 140A of the Consumer Credit Act 1974, the foundation for the FCA’s scheme.
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JudgmentCourt of Appeal sides with consumers in Johnson, Wrench, and Hopcraft
The ruling that dealers owed customers disclosure duties triggered provisioning across the motor lending sector.
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OtherFCA opens review of discretionary commission arrangements
The regulator paused complaint-handling deadlines and launched a skilled-person review of historic motor finance commissions.
Experimental AI forecast
How it is madeHow will the Upper Tribunal rule on the four challenges to the FCA’s motor finance redress scheme by December 31, 2027?
- Tribunal dismisses all four challenges42%
- Still pending on December 31, 202724%
- Lenders win on at least one ground18%
- Consumer Voice wins on any ground14%
- All challenges withdrawn2%
- Resolves by
- Dec 31, 2027in 14 months
- Record confidence
- Medium
The most likely outcome, at 42%, is that the Upper Tribunal dismisses all four challenges by December 31, 2027. The FCA’s scheme follows a full consultation and builds directly on the Supreme Court’s section 140A ruling in Johnson, which gives the regulator a strong legal footing. The hearing runs February 16 to March 3, 2027, so a decision before year-end is likely.
How it resolves. Resolves on the Upper Tribunal’s first-instance decision on the rolled-up challenges, as published by the tribunal or announced by the FCA, by December 31, 2027. “Dismisses all” means every ground of all four challenges fails. “Lenders win” means at least one lender ground succeeds and no Consumer Voice ground succeeds. “Consumer Voice wins” means at least one Consumer Voice ground succeeds, whatever happens to the lender grounds. “Withdrawn” means all four challenges are withdrawn or discontinued before any decision. Otherwise the question is still pending.
Reasoning
Starting point. Judicial-review-style challenges to UK financial regulator rules and redress schemes that reach a full hearing: Roughly 25% to 35% of UK judicial review claims that reach a substantive hearing succeed on at least one ground. Regulators defending consulted rules tend to do better.
Substantive UK judicial review challenges succeed roughly 25% to 35% of the time, and consulted regulatory rules usually get deference on design and calibration choices. The scheme rests on the Supreme Court’s August 1, 2025, ruling, which narrows the room for either side to argue it misreads the law. The challenges also pull in opposite directions, with lenders saying it overpays and Consumer Voice saying it underpays, which favors a scheme sitting within the range of reasonable choices. The FCA’s attack on Consumer Voice’s funding disclosure adds some risk for that challenger, though it goes more to standing and costs than to the merits. A lender win on a narrow ground, such as eligibility scope or the calculation method, is the leading alternative to outright dismissal. The hearing ends March 3, 2027, leaving about ten months for a reserved judgment in a complex rolled-up case, so a material chance of delay remains. The extension of the hearing by a few days since the October 14 forecast moved no outcome by five points or more, and only shifted one point toward pending. Withdrawal is unlikely because the scheme’s costs and the lenders’ provisions keep both sides committed.
Scheme anchored in Supreme Court section 140A ruling in Johnson · Deference to consulted FCA rules on redress design · Opposing challenges suggest scheme sits within reasonable range · Reserved judgment timing after March 3, 2027 hearing end · Funding disclosure dispute weakening Consumer Voice’s position
Generated automatically by Claude Opus 5.5 on Oct 31, 2026 from this case’s record on this site, and published without editorial review. The probabilities are the model’s judgment, not measured frequencies, and they are scored publicly as cases resolve. Not legal or investment advice. How the forecasts are made
What it would mean
If the tribunal dismisses all four challenges, lenders would pay about $9.9B (£7.5B) in redress on about 12.1 million agreements, with total industry cost of up to £9.1B. Disclosed provisions already track that design. Lloyds Banking Group holds about $2.6B, FirstRand about $990M, Santander UK about $810M, and Close Brothers about $420M. Dismissal would mostly turn those reserves into cash rather than create new charges. Payments would start no earlier than the second half of 2027, and later if the ruling is appealed.
The largest consequences follow if Consumer Voice wins on any ground. It argues that average harm is about £1,100 per agreement against the scheme’s £830, and that about 4.7 million agreements were wrongly excluded. A scheme rebuilt along those lines could push redress toward about $13B and turn current provisions into floors. FirstRand has said MotoNovo already needs recapitalization, and Close Brothers paid no dividend for fiscal 2026. A lender win on any ground would mainly cut costs for the captive finance arms, but no published estimate sizes that saving.
Money, who pays, markets and what to watch
Two steps ahead. Time is the hidden cost. Redress carries interest at base rate plus 1% until paid, so every quarter of delay raises lenders’ bills whoever wins. If any ground succeeds, the likely remedy is sending the scheme back to the FCA, with a possible appeal, which could push cash beyond 2027. The Aldermore sale would then have to price an unresolved liability, giving an early market read on MotoNovo’s exposure.
The money
- UK motor finance lenders: $9.9B to $13.2B. Industry-wide redress. Low: FCA estimate of £7.5B if 75% of the 12.1m eligible consumers claim (scheme upheld as designed). High: about £10.0B, which is the same £830 average at 100% take-up, and also roughly 12.1m x 75% x the £1,100 average harm Consumer Voice cites. Converted at the £320M = $423M rate Bloomberg used on September 29, 2026. Excludes the FCA’s £1.6B of non-redress costs. Scheme payment deadlines are suspended. Cash moves after the tribunal ruling, the second half of 2027 at the earliest, and later if there is an appeal or the scheme is sent back to the FCA.[1][2][3][4][5]
- Lloyds Banking Group: $2.6B to $3.4B. Low: disclosed £1.95B provision, which Lloyds kept unchanged after the final rules. High: that provision scaled by the ratio of Consumer Voice’s £1,100 average harm figure to the scheme’s £830 average (about £2.58B). Converted at about $1.32 per pound. After the tribunal ruling and any appeal, second half of 2027 at the earliest.[6][7][3][2][5]
- Santander UK: $814M to $1.1B. Low: £616M provision reported with nine-month 2026 results (it had been £633M after Q1 2026). High: the £616M scaled by Consumer Voice’s £1,100 harm figure against the £830 scheme average. Converted at about $1.32 per pound. After the tribunal ruling and any appeal, second half of 2027 at the earliest.[8][9][3][2][5]
- FirstRand: $991M to $1.3B. Low: total £750M provision covering MotoNovo and the wider UK motor book. High: the £750M scaled by Consumer Voice’s £1,100 harm figure against the £830 scheme average. Converted at about $1.32 per pound. After the tribunal ruling and any appeal, second half of 2027 at the earliest.[10][3][2][5]
- Close Brothers: $423M to $561M. Low: £320M provision ($423M per Bloomberg), matching the company’s own c.£320M estimate of the scheme as published (about 720,000 loans at about £500 average). High: the £320M scaled by Consumer Voice’s £1,100 harm figure against the £830 scheme average. Viceroy Research, a short seller, has claimed £572M to £1.23B. Close Brothers had assumed a rollout from summer 2026 to end-2027. Now after the tribunal ruling and any appeal.[5][11][12][3][2]
- Volkswagen Financial Services: $958M to $1.3B. Low: reported £725M motor finance charge. High: the £725M scaled by Consumer Voice’s £1,100 harm figure against the £830 scheme average. A lender win on its own challenge could reduce the figure, but no published estimate sizes the reduction. Converted at about $1.32 per pound. After the tribunal ruling and any appeal.[13][3][2][5]
- Figures used: Lloyds Banking Group, reserve for this litigation $2.6B (Apr 2, 2026)[6][7][5] · Santander UK, reserve for this litigation $814M (Sep 2026)[8][5] · FirstRand, reserve for this litigation $991M (Apr 2026)[10][14][5] · Close Brothers, reserve for this litigation $423M (Sep 29, 2026)[5][15] · Volkswagen Financial Services, reserve for this litigation $958M (2026)[13][5]
Who pays
- The lenders pay directly, because the scheme rules bind FCA-authorized firms. Lloyds Banking Group, through Black Horse, carries the largest disclosed provision at £1.95B.[6]
- For the challenging captives, the cost falls on carmaker and bank parents: Volkswagen, Mercedes-Benz, and Crédit Agricole (for CA Auto Finance). Volkswagen has taken a reported £725M charge.[13][16]
- FirstRand pays through Aldermore and MotoNovo. It says MotoNovo needs recapitalization from its UK resources and has put Aldermore up for sale, so a buyer could end up pricing any remaining liability.[10][13][14]
- Consumers who use claims firms or lawyers risk losing more than 30% of their redress in fees, according to the FCA. Consumer Voice’s litigation funding has not been disclosed, the FCA says.[17]
- No insurance recovery for redress costs has been disclosed by any lender.[6][11][10]
Markets
- Lloyds Banking Group (LSE: LLOY) closed up 9.00% at 82.56p on August 4, 2025, the first trading day after the Supreme Court’s Johnson ruling.[18]
- Reports of Close Brothers’ (LSE: CBRO) move on August 4, 2025, differ, ranging from 21% to 30% in early trading. No closing figure is confirmed.[19]
- Close Brothers reported a fiscal 2026 statutory operating loss of £162.1M and paid no dividend. Its CET1 ratio rose to 14.1% from 13.8%. It has said distributions depend on motor finance clarity.[15]
- Short seller Viceroy Research claimed in March 2026 that Close Brothers’ liability could reach £572M to £1.23B. The company says the scheme as published would cost about £320M.[12][11]
- FirstRand (JSE: FSR) said its provision was more than 40% of its 2025 earnings and forecast a 4% to 9% fall in normalized earnings. Santander UK’s pre-tax profit fell 6% for the first nine months of 2026.[14][10][8]
Collecting
- Collection is not the main risk. The scheme rules bind authorized firms, and the FCA can enforce them once the tribunal suspension lifts. Firms must meanwhile keep identifying eligible agreements and gathering commission data.
- Redress carries simple interest at the Bank of England base rate plus 1% until payment, so delay adds to the bill.[20]
- The scheme is unlikely to pay out before the second half of 2027, and an appeal of the tribunal decision could push payments later.[4]
- Smaller lenders are where solvency matters most. Close Brothers says its capital can absorb the cost. FirstRand says MotoNovo needs fresh capital.[11][10]
Beyond the parties
- The ruling will test how far a regulator can impose industry-wide redress under section 404 of the Financial Services and Markets Act 2000. Future FCA schemes will be built around whatever limits it sets.
- Consumers stand to receive an average of about £830 per agreement. Consumer Voice argues that the real harm is about £1,100 and that about 4.7 million agreements are wrongly excluded.[2][3][21]
- Credit supply is at stake in a market that lent a record £41B in 2025. FirstRand has warned that capital for UK motor lending could be severely constrained, and it is weighing an exit.[1][14]
- Lenders still face litigation outside the scheme. Lloyds lists litigation among the uncertainties remaining in its provision.[6]
- If the scheme is upheld, claims would run through a free regulatory process rather than fee-charging claims firms. The FCA has questioned Consumer Voice’s funding and its links to Courmacs Legal.[17]
What to watch
- Feb 16, 2027Upper Tribunal opens the rolled-up hearing of all four challenges
- Mar 3, 2027Upper Tribunal hearing closes and judgment is reserved
- Second half of 2027Earliest window for the tribunal ruling and the lifting of the suspended payment deadlines[4]
- 2026 to 2027FirstRand sale of Aldermore, whose price will reflect MotoNovo’s redress liability[13][14]
Sources
- Policy Statement PS26/3 Motor Finance Consumer Redress Scheme fca.org.uk · 2026-03-30
- Millions of car finance customers to get payouts this year as FCA goes ahead with compensation scheme fca.org.uk · 2026-03-30
- Consumer Voice Challenges Adequacy Of FCA Motor Finance Redress Scheme In Upper Tribunal grcreport.com · 2026-10-19
- Motor finance redress scheme challenges listed for February 2027 lawplus.co.uk · 2026-10
- Close Brothers Says Car-Loan Provision Stays at £320 Million bloomberg.com · 2026-09-29
- Lloyds sticks with £1.9bn set-aside for motor finance redress scheme motortrader.com · 2026-04-07
- Lloyds sticks with £2 billion motor finance provision ajbell.co.uk · 2026-04-02
- Santander profits slide 6% as car finance compensation scandal begins to take toll cardealermagazine.co.uk · 2026-10-31
- Santander UK profits down as bank hikes motor finance provisions to £633m scottishfinancialnews.com · 2026-04-29
- FirstRand won’t challenge FCA motor-finance redress scheme moonstone.co.za · 2026-04
- Close Brothers Group plc: Update in relation to motor finance commissions closebrothers.com · 2026-04-08
- Close Brothers confirms £320 million motor finance redress provision lawplus.co.uk · 2026-05
- Motonovo hikes motor finance provision as buyers circle Aldermore cityam.com · 2026-10
- UK motor finance claims force FirstRand to weigh exit businessday.co.za · 2026-04-07
- Close Brothers FY26 slides: turnaround advances amid motor finance drag investing.com · 2026-09-29
- Four challenges, one answer: the motor finance redress fight gets bigger news.evenstance.com · 2026-05-06
- Lloyds sticks to £2bn provision for motor finance compensation lbc.co.uk · 2026-04-02
- Lloyds surges after motor finance ruling sharecast.com · 2025-08-04
- British bank shares jump after Supreme Court ruling on car loan claims marketscreener.com · 2025-08-04
- FCA finalizes Motor Finance Consumer Redress Scheme mayerbrown.com · 2026-04
- Consumer Voice Challenges FCA £9.1bn Car Finance Scheme changeflow.com · 2026-04-23
Experimental AI analysis by Claude Opus 5.5 on Oct 31, 2026, built on the forecast above from this case’s record and public sources found by the model’s own web search. Figures are estimates as of the dates shown, and shares of value are computed by the site from the figures cited. Published without editorial review. Nothing here predicts the price of any security or is investment advice. How it is made