The Financial Conduct Authority spent five years building a number. On 30 March it put its name to the final one: £7.5bn of redress, drawn from a sector bill of £9.1bn, spread across 12.1 million car finance agreements written between April 2007 and November 2024. PS26/3 is the largest consumer-redress exercise the regulator has run since PPI, and it was written to end the argument, not extend it.
It has not ended the argument. On 2 July the Upper Tribunal suspended the parts of the scheme that actually move money. Firms are, for now, not required to calculate redress, pay it, or write to customers telling them what they are owed. The cheques the FCA promised would start landing this year are frozen behind a hearing that has not yet been held.
What the scheme decided
The mechanics are worth holding onto, because they are what is being fought over. The scheme splits at 1 April 2014 — the point at which the FCA took over consumer-credit supervision from the Office of Fair Trading. Scheme 1 covers older agreements; Scheme 2 covers the rest. Most consumers do not get their commission back in full. Instead they receive a hybrid figure: the average of the commission the lender paid the dealer and an estimate of the borrower’s actual loss, plus interest, with the loss modelled against a discounted APR (roughly 17% for post-2014 agreements, 21% for the earlier book). The FCA’s own worked average lands near £830 an agreement.
Only the sharpest cases get the full remedy. Around 90,000 consumers whose facts track the Supreme Court’s decision in Johnson v FirstRand — an undisclosed commercial tie or a discretionary commission arrangement, plus commission of at least 50% of the total cost of credit and 22.5% of the loan — recover all of the commission with interest. That judgment, handed down on 1 August 2025, is the scheme’s legal spine: the Supreme Court narrowed the Court of Appeal’s sweeping commission ruling but upheld Johnson on unfair-relationship grounds under section 140A of the Consumer Credit Act. The FCA built the redress model to that shape, then assumed 75% of eligible consumers would take part to reach its £7.5bn.
Frozen, not abandoned
The suspension is partial by design, and the distinction matters for anyone modelling lender provisions. What is on hold is the money: calculating redress, paying it, and issuing scheme communications on the published timetable. What continues is the preparation. Firms must still identify relevant complaints and agreements, gather the commission data needed to work out who was affected, respond to complainants who turn out not to be owed anything, keep brokers updated, and cooperate with the Financial Ombudsman Service. The machinery keeps turning; it just does not disburse.
That is a more expensive limbo than it sounds. Lenders have already taken provisions against the £9.1bn sector figure, and the operational cost of running identification and data-gathering without the certainty of a payout date is real. The FCA’s framing is that its route is still cheaper for firms than the alternative — it estimates the Ombudsman-and-courts path would cost the sector more than £6bn on top — but that argument only pays off once the scheme is allowed to run.
Attacked from both flanks
The unusual feature of this challenge is that the FCA is being squeezed from opposite directions at the same time. The 2 July suspension was agreed with four parties: Consumer Voice, represented by Courmacs Legal; Volkswagen Financial Services; Mercedes-Benz Financial Services; and Crédit Agricole Auto Finance.
Consumer Voice’s complaint is that the scheme is too mean — that the hybrid remedy and the interest calculation do not fairly reflect the harm, and that the FCA trimmed redress to protect lenders’ balance sheets. The three lenders are litigating from the other side, contesting the basis and reach of a scheme that reprices commission arrangements retrospectively across more than a decade of lending. A regulator being told simultaneously that it has been too generous and too stingy is either evidence that it found the middle, or evidence that the middle is not legally stable. The Upper Tribunal will decide which.
The date that actually matters
The hearing is listed for 14–18 December 2026, or 16–26 February 2027, with the later window depending on whether the parties seek further disclosure or expert evidence. That is the timetable now, not the FCA’s original one. If the scheme is upheld and no one appeals, payments begin in 2027 — a year later than the “payouts this year” headline the regulator ran in March. If any material part is struck down, the FCA has to redesign, and redress slips to 2028 or beyond.
The FCA’s public line is unbowed: its scheme is, it says, “the quickest, fairest and most efficient way to compensate consumers and we will defend it robustly.” That may prove correct. But the honest answer to the question every affected motorist is asking — is the money actually coming? — is now a procedural one. The number is settled. Whether it is paid, and when, is a matter for a tribunal that will not sit until the back end of the year at the earliest. Until then, the largest redress scheme since PPI exists in full on paper and pays out nothing.
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