The FCA's motor finance redress scheme, confirmed on 30 March 2026, was meant to bring certainty to a market that has waited years for resolution. Instead, four separate legal challenges have suspended key parts of it.
Four separate legal challenges - from three lenders and a consumer group - led the Upper Tribunal to suspend key parts of the scheme, with hearings not scheduled until December 2026 or February 2027. Even if the scheme survives those challenges intact, payouts are unlikely to begin before mid-2027, and further appeals remain possible. In the meantime, lenders do not have to calculate or pay any compensation under the suspended provisions.
By the time regulatory-timeline risk shows up in a fund's cash flow, as this year's failures demonstrate, it's already too late to price.
A cash-flow problem, not a legal footnote
For funders and law firms whose economics assumed a 2026 payout, that gap is now a cash-flow problem, not a legal footnote - and it is precisely the mechanism behind two of the failures already covered in this series. Some claimant lawyers argue the delay will push more claimants toward litigation rather than the regulatory scheme, which cuts both ways for funders: more claims volume, but on a timeline no one controls and against defendants who will fight harder outside a structured redress process.
Regulatory-timeline risk of this kind is exactly the category of red flag a scheme appraisal is built to surface before capital is committed - because by the time it shows up in a fund's cash flow, as several of this year's failures demonstrate, it's already too late to price.
Regulatory-timeline risk of this kind is exactly the category of red flag a scheme appraisal is built to surface before capital is committed.
Our scheme assessment service →Anthony Berry
Principal, ATE Legal - ATE, funding & market. View profile →
