The Financial Conduct Authority (FCA) is set to face a legal battle over its motor finance redress scheme in early 2027. The City watchdog confirmed that the Upper Tribunal (Tax and Chancery Chamber) will hear challenges from three lenders and the advocacy group Consumer Voice between 16 and 26 February.
The lenders involved are Volkswagen Financial Services, Mercedes-Benz Financial Services, and Crédit Agricole Auto Finance. The legal action follows widespread opposition to the FCA's multi-billion-pound programme, which led to the regulator suspending the scheme in July.
The FCA's finalised proposals, published at the end of March, indicated lenders were liable for £9.1bn, a figure lower than initially expected after the number of qualifying agreements was reduced. Volkswagen Financial Services UK (VWFS) has already provisioned £725m for anticipated expenses related to the car finance redress scheme.
Captive lenders have argued that the scheme unlawfully assumes most customers suffered a financial loss if commissions were not clearly disclosed. Lenders have also accused the FCA of using complex economic modelling to justify the scheme and refusing to share data and code with affected firms or the Upper Tribunal.
Consumer Voice has raised concerns about alleged unprecedented Treasury influence over the scheme, calling for full disclosure of the regulator's communications with the government.