Martin Lewis MSE issues car finance compensation update with delay
Martin Lewis' Money Saving Expert team has issued a major new update around the car finance refresh scheme, with payouts set to be delayed.
Martin Lewis' Money Saving Expert group has warned that car finance compensation payments will be delayed by four months. The Financial Conduct Authority's car finance redress scheme was expected to start from July, but payments now look likely to be delayed until November.
According to MSE, the delay is due to four legal challenges. Three are from car finance lenders while another is from a consumer rights group aiming to increase payouts for motorists. The key disputes include whether the FCA has the power to make the rules and arguments around the basis for determining whether lenders are liable and how redress should be calculated.
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The FCA explained that it is unclear when the case will be heard at this stage, but admitted it was unlikely to be before October. This has left the FCA to delay any payments until mid November in a blow to motorists expecting money.
The FCA said they recognise the operational strain and uncertainty car finance firms face as a result of payouts. However, the FCA also stressed that they acknowledge the frustration of consumers, with many road users now waiting over two years for answers.
The FCA said: “While we do not know when any Tribunal decision will be made, lenders should prepare on a precautionary basis for mid-November 2026. They should be ready from then to deal with complaints within the usual statutory timeframes.
“There would be no further extension of the complaints pause. Lenders have already been required to undertake as full preparations as they can for complaints they have received, notwithstanding the pause, and there is adequate time between now and mid-November 2026 to prepare responses to those complaints.”
The FCA has previously ruled that around 12.1 million agreements are eligible for compensation payouts. The average payout per claim is expected to be around £830 per person, with the total compensation said to be around £7.5 billion.
The FCA has called on car finance firms to continue to prepare for the redress scheme by identifying relevant complaints and agreements.
Money Saving Expert has continued to call on motorists who had a PCP or HP motor vehicle finance from April 2007 to November 2024 to file a complaint.
Martin has repeatedly stressed that putting a complaint will likely mean an easy and quicker payout when compensation is eventually awarded.
