As many former car loan and leaseholders know, the FCA scheme aims to pay compensation to those unaware that hidden commissions were built into various agreements. If you were counting on a handy wedge for the Christmas shopping spree, think again;
The FCA confirmed recently that legal challenges to its compensation scheme will be heard by the Upper Tribunal between 16 to 26 February 2027.
With the scheme partially suspended, the FCA urged lenders to continuing complying with the rules that remain in force while preparing for the possibility that the scheme, or parts of it, could be quashed.
Reacting to the announcement, Harry Charalambous, Principal at leading banking and credit advisory consultancy Broadstone, commented: “The confirmation of a hearing date provides some clarity on the timeline, but lenders cannot afford to put their preparations on hold while they wait for the legal outcome. The FCA has been clear that firms must continue progressing complaints and prepare for all potential outcomes including a no scheme scenario where the usual complaint-handling process and statutory timescales will apply.
“Historic data gaps, legacy system issues, identifying the right customer population and building robust redress calculation processes all take time to address. Lenders should use this period to strengthen their operational readiness and contingency planning. Those that wait for complete legal certainty risk facing a compressed timeframe to resolve complex historic complaints, placing significant pressure on resources and increasing execution risk.”
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