What happens to your car finance claim while the scheme is paused?
Why is the scheme paused?
On 2 July 2026, the Upper Tribunal partially suspended the FCA's motor finance redress scheme after four parties — including three lenders — challenged its lawfulness. The Tribunal will hear those challenges in December 2026 or February 2027, and key parts of the scheme are on hold until it does.
"Partially suspended" is a compromise: it lets firms keep preparing while avoiding work that might have to be redone if the challenges succeed.
What is still happening
The pause doesn't stop everything. During the suspension, lenders must still:
- Identify complaints and agreements that fall within the scheme
- Gather the data needed to work out whether unfair commission arrangements were in place
- Tell people who are not owed compensation under the scheme
- Cooperate with the Financial Ombudsman Service on complaints already referred to it
Complaints that fall entirely outside the scheme also continue to be handled in the normal way.
What is on hold
The parts that lead to a payout. While the suspension is in force, firms are not required to calculate or pay compensation, or to send communications telling people how much they are owed. That resumes once the Tribunal process concludes.
Could the scheme be changed — or scrapped?
The FCA has been direct about the range of outcomes. There are broadly three possibilities once the Tribunal has ruled:
- The scheme is upheld — it continues largely as designed, and the compensation machinery restarts.
- The scheme is changed — parts are amended in light of the ruling before it resumes.
- The scheme is quashed — in the worst case, there would be no scheme and no complaints pause. Complaints would instead be handled case by case, largely through the Financial Ombudsman Service under the usual statutory timescales.
The FCA has told lenders to be ready for any of these, but it has also said its scheme is "the quickest, fairest and most efficient way to compensate consumers" and that it will defend it robustly. A scrapped scheme is a contingency the regulator is planning for — not a prediction.
Does the pause affect your eligibility?
No. The suspension is about timing, not entitlement. If you had a car finance agreement between 6 April 2007 and 1 November 2024, you remain in scope. Even if the scheme were ultimately quashed, the underlying right to complain about an unfair agreement — the route the Supreme Court confirmed in 2025 — would still exist through the Ombudsman and the courts.
What should you do now?
- Register your claim now, don't wait for the pause to lift. Getting your details in means you're ready the moment compensation decisions restart, rather than joining a rush later.
- Keep any paperwork you have about your old car finance — though you don't need documents to start a check.
- Ignore pressure tactics. Nothing about the suspension creates an urgent, act-today deadline for consumers; be wary of anyone claiming otherwise.