The Financial Conduct Authority said the Upper Tribunal has partially suspended parts of its motor finance compensation scheme on terms agreed with the four commercial parties challenging it. The order lets firms keep preparing for the scheme and progress complaints as far as possible, but they do not have to calculate or pay redress, or send communications about compensation owed under the scheme timetable, until the tribunal process concludes. The tribunal is due to hear the challenges on 14 to 18 December 2026 or 16 to 26 February 2027, with the final listing depending on whether any applications for expert evidence or disclosure are made and succeed. Rules that are not suspended remain in force. Firms must still identify relevant complaints and agreements, gather data on commission arrangements and disclosure practices, tell complainants who are not owed compensation under the scheme by the relevant deadlines subject to limited exceptions, resolve non-scheme aspects of mixed complaints, and cooperate with the Financial Ombudsman Service on referred cases. Brokers must provide requested documents or confirm they do not hold them within one month. The FCA said it will supervise proportionately and pragmatically, and will not treat firms as non-compliant or take enforcement action if they need extra time to tell consumers they are not owed compensation, provided this is done within seven weeks of the relevant scheme deadline. The complaint handling pause expired on 31 May, so complaints wholly outside the scheme should continue under the usual process. The FCA is supervising lenders on a contingency assumption that, if the scheme or parts of it are quashed, there would be no complaints pause and no motor finance compensation scheme. Firms should therefore be operationally and financially ready to resolve historical liabilities through a complaint-led and supervisory approach, make the necessary provisions, engage auditors, and maintain appropriate capital and liquidity in a UK regulated entity or face possible action including business restrictions. For consumers, compensation payments remain paused while the legal challenge runs. If the scheme is upheld and not appealed, the FCA expects payments to begin in 2027. If it is overturned in whole or part, the FCA may instead require lenders to resolve complaints individually under the usual complaints process, under which lenders would need to respond within eight weeks.

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