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The UK’s financial watchdog has been forced to pause payouts on its £9.1 billion car finance redress scheme, meaning millions of motorists are facing further delays to compensation. The Financial Conduct Authority facing legal challenges from four companies who are not happy with its plans to compensate people mis-sold a car loan. Payouts were meant to start this year but are now facing significant delays. The UK’s Upper Tribunal has agreed to hear the legal challenges in December or February next year, with a judgment expected in the following months. The financial services arms of carmakers Volkswagen AG and Mercedes-Benz Group AG and the car finance arm of French bank Credit Agricole SA, as well as Consumer Voice a group representing consumers, are asking the courts to quash the scheme, arguing the rules are unlawful. The FCA said the tribunal had ordered that parts of its motor finance scheme were suspended on terms agreed with the four parties involved. The pause means that lenders will no longer need to calculate or pay compensation to people owed money, nor tell customers about compensation they are owed, until the legal process concludes. They will, however, have to keep preparing for the scheme and progressing customer complaints as far as possible including telling people if they are not owed any compensation. If judges decide to uphold its scheme, and the judgment is not appealed, then it expects payments to begin in 2027. The FCA said it will need to decide what to do next if the courts decide to overturn the programme and there can be no industry-wide compensation scheme. Volkswagen shares rose 3.0% to €72.04 each on Thursday afternoon in Frankfurt, while Mercedes shares were up 1.9% at €44.61. Credit Agricole shares traded 1.8% higher at €17.79 in Paris. By Anna Wise, Press Association Business Reporter Press Association: Finance source: PA Copyright 2026 Alliance News Ltd. All Rights Reserved.
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