Tribunal orders FCA disclosure, extends car finance hearing

The Upper Tribunal has fixed a hearing beginning in February 2027 for challenges to the Financial Conduct Authority's motor finance compensation scheme and ordered the regulator to disclose further loan data and modelling. For lenders, the FCA's statement, updated on 26 October, carries a second instruction: keep building the partially suspended scheme, but also prepare to handle complaints under the ordinary process if the rules are struck down.

The hearing is now listed for 16 February to 3 March 2027, with a judgment expected in the following months. The tribunal initially listed it for 16 to 26 February, then extended the end date on 26 October. That replaces the earlier uncertainty over whether the case would be heard in December or February. It does not decide the merits of the four challenges, and it does not set a date for compensation payments.

The new element is the evidence the tribunal has ordered the FCA to disclose. Its 12 October directions order requires disclosure of a loan-level dataset, Data Drop 1, Data Drop 3, and two analyses of discretionary commission arrangements. The order specifically includes the code or scripts behind the FCA's matching methodology in one impact analysis. A further order issued on 26 October directs the FCA to disclose that material to Consumer Voice under a confidentiality ring.

What the tribunal will test

The tribunal has allowed CA Auto Finance and Volkswagen Financial Services to rely jointly on one economic expert. That expert may examine whether the evidence supports the FCA's assessment of consumer harm from discretionary commission, high commission and tied arrangements, how actual loss might be assessed and whether the scheme could more accurately target any harm. Mercedes-Benz Financial Services may use a separate economist to address whether captive lenders, which are tied to carmakers, differ sufficiently from third-party lenders to warrant different treatment. Consumer Voice may rely on specified expert reports, and the FCA may put forward one economist in response.

Permission to put those questions to experts is a procedural decision. The order does not find that the FCA's analysis is wrong, that consumers suffered no loss, or that any challenger's proposed method is right. It sets the material and testimony the tribunal can consider when it hears the substantive applications.

The FCA's case-document page identifies the applicants as CA Auto Finance UK, Consumer Voice, Mercedes-Benz Financial Services UK and Volkswagen Financial Services (UK). The challenges contest the lawfulness of rules made under the Financial Services and Markets Act 2000. The regulator says its industry-wide scheme remains the quickest and fairest route to compensate consumers and that it will defend it.

Clarqo reported in July on the possible February hearing window and the suspension of payments. The tribunal's October directions fixed a 16 February start and specified the data and expert evidence to be tested. The FCA's 26 October update then reported the later 3 March finish. This is a firmer litigation timetable and a more detailed account of the dispute, not a tribunal ruling on who should receive redress.

Two operating plans for lenders

The scheme has been partially suspended since July, so lenders do not currently need to calculate or pay compensation under it. Some other rules remain in force. According to the FCA's updated firm guidance, lenders must continue identifying relevant complaints and agreements, collecting commission and disclosure records, including material held by brokers, and responding to certain complainants who are not owed compensation under the scheme. Brokers must provide requested information, or confirm they do not hold it, within one month. The FCA has suspended monthly scheme reporting during the litigation.

The regulator now emphasises a contingency that would put pressure on the same complaint teams. If the scheme or parts of it are quashed, there may be no scheme and no complaint-handling pause. In that scenario, firms would have to be operationally and financially ready to resolve complaints through the usual process and within the usual time limits. The FCA tells lenders to plan rigorously, make necessary financial provisions and engage their auditors. It has not announced that this scenario will occur.

That creates a practical double track. Firms still need records and processes to implement the scheme if it survives, while preparing for individual complaint handling if it does not. The tribunal has not yet settled which route will apply. Nor has the FCA said whether it would seek a revised scheme after an adverse ruling; its earlier contingency statement said that would require further consideration and could entail consultation.

For consumers, the hearing beginning in February is another stage in the dispute, not a payment deadline. The FCA says some complainants may receive a letter explaining that no compensation is due, while others may hear nothing until the legal process ends. An absent letter therefore says nothing conclusive about eligibility. People concerned about their agreement can complain directly to their lender without paying a representative, according to the regulator's guidance.

The next firm dates belong to the litigation. Following a 23 October case management hearing, the tribunal's 26 October order sets 13 and 27 November deadlines for challengers' expert reports and 16 December and 8 January deadlines for FCA responses. The experts must meet by 15 January and produce a joint memorandum identifying points of agreement and disagreement by 22 January. The order also calls for a pre-hearing review in January and lists a 12-day merits hearing starting on 16 February. These are steps for testing the case, not findings about the scheme's lawfulness or who should receive redress.