Committee publication · Correspondence · 20 May 2026
Correspondence from the Chair to the Chief Executive of the FCA on motor finance compensation, dated 20 May 2026
From: Treasury Committee
Summary
The Treasury Committee Chair writes to the FCA Chief Executive seeking urgent clarification on the motor finance compensation scheme following legal challenges announced 1 May 2026. The letter requests details on FCA advice to consumers, timetable impacts, administrative costs, fraud risks, market participant conduct, and lessons for Parliament regarding the FCA's regulatory powers in managing compensation schemes.
Key findings
- FCA faces multiple legal challenges to its motor finance compensation scheme, with implications for consumer redress timelines and scheme viability
- Committee seeks clarity on FCA's current guidance to affected consumers and firms during the legal challenge period
- Questions raised regarding fraud risks arising from compensation scheme delays and whether all consumer complaints remain affected
- Chair requests cost accounting for FCA work to date and additional expenditure (legal fees, staff time) triggered by legal challenges
- Committee exploring whether legal challenges may force scheme restructuring and what consequential impacts would fall on consumers, firms, and the Financial Ombudsman Service
Tone
ProceduralTopics
financial-regulationconsumer-protectionmotor-financecompensation-schemes
Key actors
Nikhil Rathi, Dame Meg Hillier MP, Financial Conduct Authority, Treasury Committee, Financial Ombudsman Service
Notable line
“The Committee would welcome further updates the FCA can provide, should it be needed, on the questions above.”
Key Quotes
“Following the FCA's announcement of several legal challenges to its work in this area on 1 May 2026 1 …”
“To what extent does the delay raise the risk of consumers suffering fraud? Has the FCA been monitoring for any potential fraud or other economic crime related to this compensation scheme?”
“The Committee recognises that this is a moving situation. The Committee would welcome further updates the FCA can provide, should it be needed, on the questions above.”
Source · parliament.uk record ↗