5:22 pm, April 29, 2026
Mercedes-Benz and two other lenders have moved to challenge the Financial Conduct Authority’s (FCA) motor finance redress scheme for consumers.
This follows the announcement last week from a consumer group that also lodged an appeal. However, as the German carmaker is exposed through Mercedes-Benz Financial Services, it’s likely it believes the scheme is too harsh on lenders.
It comes days after several of the UK’s biggest motor finance lenders said they had decided not to pursue a challenge.
A spokeswoman for Mercedes-Benz said: ‘Given that this is subject to ongoing legal proceedings, we cannot comment further.’
The FCA also confirmed that two other lenders were appealing. It did not name the firms but reports have said that Volkswagen Financial Services was one of the companies involved, according to Sky News.
A spokeswoman for the FCA said: ‘We have received challenges from three lenders in addition to the challenge from Consumer Voice, represented by Courmacs Legal.
‘We are considering our approach and will set out more later this week.’
Earlier this week, it appeared that the watchdog had a clearer path to proceed with the compensation plans after the main industry body joined major lenders in backing out of any legal challenge.
The Finance and Leasing Association (FLA) said it had ‘concerns’ about the programme but that it was choosing not to raise a challenge, while Santander, Barclays and Lloyds had also decided to accept the scheme as it is.
The FCA estimates that payouts are due on 12.1 million mis-sold car finance deals from an array of lenders, expected to result in compensation totalling around £7.5 billion.
The deadline for companies to lodge legal challenges to the watchdog’s scheme passed on Monday.
While the lenders are likely to be resisting the billions of pounds of compensation that they are required to pay, the FCA is also being challenged on the other side of the coin by a group representing consumers.
Consumer Voice has applied to the Upper Tribunal for a review of the scheme over concerns that it could leave millions of consumers out of pocket by several hundred pounds per claim.
The consumer group said it supports the need for an industry-wide scheme but argued that it should ‘fairly reflect’ the harm drivers have suffered, with ‘properly calculated compensatory interest’.
