The Financial Conduct Authority said the Upper Tribunal will hear legal challenges to its motor finance compensation scheme from Feb. 16 to 26, 2027, with a judgment expected in the following months. The scheme, challenged by three lenders and Consumer Voice, remains partially suspended, and lenders do not currently need to calculate or pay compensation. Firms must continue preparing for the scheme, progress complaints as far as possible and comply with rules that remain in force, including required communications to some consumers who are not owed compensation. Consistent with the FCA’s earlier contingency planning instructions, lenders must also prepare for the possibility that some or all of the scheme is quashed. They should be operationally and financially ready, make necessary provisions and engage auditors so they can resolve complaints under the usual process and statutory timescales if no scheme or complaint handling pause remains. Consumers can continue to complain directly to lenders for free. The FCA cautioned that law firms and claims management companies may charge up to 36% of compensation and that cancellation fees must be reasonable and reflect work performed.

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