LONDON, July 2, 2026, 17:04 BST
- The FCA said its motor-finance redress scheme is now partly on hold, with the Upper Tribunal suspending parts of it until hearings set for December 2026 or February 2027.
- Lenders don’t need to work out or pay redress before a case closes, but have to hold on to complaint files, broker records and enough capital.
- Close Brothers Group (LON:CBG) dropped 1.9%. Lloyds Banking Group (LON:LLOY) and Barclays (LON:BARC) were up. Company numbers show Close’s estimated scheme bill runs to around 52% of its market cap, going by Thursday pricing.
UK car loan firms got some cash-flow relief Thursday after the Financial Conduct Authority said they can delay working out or paying compensation until the Upper Tribunal wraps up. But the FCA kept the capital requirements in place. Lenders still have to flag cases, keep collecting commission data, and prep for handling complaints outside any possible scheme, with enough capital and liquidity left in their UK regulated units.
The tribunal is set to take up challenges either Dec. 14-18, 2026, or Feb. 16-26, 2027. Consumer Voice, plus finance units for Volkswagen AG (ETR:VOW3), Mercedes-Benz Group AG (ETR:MBG), and Crédit Agricole SA EPA:ACA, are bringing the cases.
The FCA said its plan will cover motor-finance customers who were treated unfairly any time from 2007 up to 2024. According to Reuters, the regulator accused the sector of hiding lender-dealer commissions and business deals that pushed brokers to bump up loan rates. Lloyds, Barclays, Banco Santander BME:SAN and Close Brothers have not fought the redress scheme.
The FCA’s planned payout was £7.5 billion before the scheme was put on hold by the courts. According to The Guardian, which used FCA estimates, the scheme takes in about 12.1 million car loans, and other costs run to £1.6 billion. That means the admin costs come out to around 21p for every pound of compensation.
| FCA route | Earliest cash timing | Investor issue |
|---|---|---|
| Scheme upheld, no appeal | 2027 | Redress cash goes out after initial date |
| Scheme revised after court loss | 2028 or later | Payout schedule and process still unclear |
| Complaint-led route | Eight-week firm response clock | Extra casework, bigger ombudsman exposure |
Late London trading saw big banks move higher while Close Brothers dropped again. Lloyds finished at 114.52p, up 2.11%. Barclays gained 0.99% to 520.09p. Close Brothers closed at 407.60p, down 1.92%. The FTSE 100 was up 1.67% at 10,652.87.
| Quote | Latest level | One-day move |
|---|---|---|
| Lloyds Banking Group (LON:LLOY) | 114.52p | up 2.11% |
| Barclays (LON:BARC) | 520.09p | added 0.99% |
| Close Brothers Group (LON:CBG) | 407.60p | fell 1.92% |
| FTSE 100 | 10,652.87 | gained 1.67% |
Close shares the crunch on valuation. The company’s Thursday market cap sat at £614.26 million, according to its own website. In April, Close pegged the scheme cost at around £320 million, while the IAS 37 provision stood at £294 million. Delivery costs came to about £66 million. There’s also an £18 million hit or gain for every five-point change in the projected claim rate.
| Close Brothers metric | Amount | Share of £614.26 mln market value |
|---|---|---|
| Scheme cost estimate | £320 mln | 52% |
| IAS 37 booked provision | £294 mln | 48% |
| Cost to deliver | £66 mln | 11% |
| Sensitivity to 5-pt claim rate | £18 mln | 3% |
The numbers show why a legal delay isn’t an easy win for Close. The delay means cash goes out later, but the provision and costs stay on the books. Close said the scheme estimate would knock about 25 basis points off its CET1 ratio, bringing it to 14.0%. That’s still above the 12%-13% medium-term target range.
Richard Pinch, senior director for banking and credit advisory at Broadstone, said the partial suspension gives lenders some “welcome operational clarity,” but warned lenders “cannot afford to stand still.” Daniel Gore, partner at Withers, told Reuters the dispute was shaping up to be a “ferocious fight for every compensation percentage point.” Sue Robinson, chief executive at the National Franchised Dealers Association, called the tribunal’s move an “operational pause” for dealers. The Guardian
Process costs are the big tail risk here. The Guardian said FCA chief Nikhil Rathi told MPs that a complaint-by-complaint process could add £6 billion in costs for lenders and drag on for three years. The FCA says if it drops a revised plan, lenders may have to respond to individual complaints inside eight weeks.
Bank stocks are holding up better than the latest credit data. The Bank of England said Thursday that total unsecured loan default rates climbed in Q2 and banks expect them higher in Q3. Credit-card defaults moved up too, with more rises seen ahead.
Some consumers could hear they won’t get compensation before payouts start. The FCA told lenders to notify people who aren’t due money by Nov. 18, 2026, for deals from April 1, 2014 onward, or by Jan. 18, 2027, for older agreements. Consumers can file complaints themselves for free, but the FCA warned claims firms or lawyers might charge over 30%.
