12:07 pm, May 1, 2026
The FCA has vowed to ‘robustly’ defend its position after Mercedes-Benz and three other lenders moved to challenge the watchdog’s car finance redress scheme.
Car Dealer reported last week that the German giant was one of a handful of finance providers planning to take legal action in response to the FCA’s chosen model, which was announced in March.
It comes after several of the UK’s biggest motor finance lenders decided against a challenge, which appeared to pave a clearer way forward for the FCA.
Now however, with Mercedes’ challenge on the horizon, the regulator has publicly defended the scheme.
It has also named the other outfits seeking to overturn the scheme as Consumer Voice, Volkswagen Financial Services and Credit Agricole Auto Finance.
In a statement issued this morning (May 1), the FCA said that an industry wide scheme is the ‘fastest, simplest route for consumers’ and the ‘most efficient way for firms to put things right’.
An FCA spokesman said: Our objective has been, and remains, to ensure consumers receive fair compensation as quickly as possible and to maintain a healthy motor finance market.
‘An industry wide scheme is the fastest, simplest route for consumers and the most efficient way for firms to put things right and give certainty to their investors. Alternative approaches would be slower and much more costly for firms.
‘We engaged widely in designing the scheme. While being clear not everyone would get everything they would like, we made changes to reflect feedback from both consumer groups and lenders. The final scheme is fair to consumers and proportionate for firms.
‘We welcome the broad support for the scheme and the commitment from most lenders to implement it. They have taken a pragmatic approach recognising that introducing a scheme on this scale promptly has required us to make judgements to simplify in a reasonable and lawful way some complex legal and operational issues.
‘We recognise that for some lenders this has been a difficult decision. We appreciate that they have ultimately decided to put a resolution for their customers first, many of whom have been waiting for more than two years for an answer.
‘They have also chosen to provide certainty for investors and to help rebuild trust in the market.’
The watchdog also hit out at the challenge, saying it will ‘create fresh uncertainty for millions of consumers’.
‘We respect the right of any party that the Courts decide has standing to challenge the scheme,’ the spokesman added. ‘We also note that none of the claims received are expressly in the name of individual consumers.
‘We will defend the scheme robustly as lawful and the best way to resolve such a widespread, long running and complex issue.
‘These legal challenges create fresh uncertainty for millions of consumers and for the second largest consumer credit market, with £39bn borrowed in 2024.
‘We are therefore engaging at pace with lenders and consumer groups to understand the breadth of views as we determine next steps for the scheme, including contingency planning.’
