The regulator reaffirmed that its priorities remain securing fair compensation for consumers as quickly as possible while preserving a healthy motor finance market. It said the “industry-wide scheme is the quickest, fairest and most cost-effective” route to redress, welcoming the commitment of most lenders to implement it and pledging to defend it robustly.

The FCA is engaging with the Tribunal and challengers about potentially suspending some elements of the scheme while retaining preparatory work.

Acknowledging the operational strain on firms and the frustration of consumers, many of whom have waited more than two years for an answer, the FCA confirmed that lenders should continue preparing until told otherwise.

Preparatory work that would likely be required under any scenario includes identifying relevant complaints and agreements, gathering data on commission arrangements and disclosure practices, working with claims companies where consumers are represented by multiple parties, and cooperating promptly with the Financial Ombudsman Service.

Firms are still expected to submit implementation plans by 12 May, although the FCA has dropped the requirement for formal attestations by that date, recognising plans may need to be qualified. The regulator also confirmed it would not insist firms communicate with customers in line with the original scheme timetable.

On contingency planning, the FCA noted that complaints, paused since 11 January 2024, cannot be paused indefinitely. While no decisions have been made, it is now prudent to supervise lenders on the central planning assumption that, in a worst-case scenario, no scheme would exist.

“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,” the regulator said.

It continued: “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.”

“Lenders would need to draw on the Supreme Court and High Court judgments and the reasoning in the decision of the Tribunal. There would not immediately be further FCA rules or guidance on redress methodology.”

The legal challenges argue the rules governing the scheme are unlawful, either wholly or in part. Across four separate challenges, applicants variously contend that the FCA’s approach has been unduly favourable to consumers and unduly favourable to lenders, raising issues including the FCA’s power to make the rules, the application to agreements before April 2014, limitation periods, presumptions of unfair relationships, and redress calculation.