Bite-size: Motor finance challenge set for February 2027 as Tribunal orders disclosure and expert evidence
The Upper Tribunal has confirmed a February 2027 hearing for the legal challenges to the FCA's motor finance redress schemes. We examine the latest directions on disclosure and expert evidence, what remains unresolved and what firms should consider when planning ahead and communicating with customers.
What has happened
The Upper Tribunal has listed the substantive hearing of the substantive challenges to the FCA's motor finance consumer redress schemes for nine days commencing 16 February 2027, with an additional four days of judicial pre-reading.
The directions follow a hearing on 5 and 6 October 2026 of applications for permission to rely on expert evidence and, for three of the four applicants, for specific disclosure. They require further FCA disclosure and permit economic expert evidence. They do not determine whether the schemes are lawful.
The applicants are three motor finance lenders and Consumer Voice Limited. The FCA is the respondent. The directions were made by Mr Justice Thompsell and Upper Tribunal Judge Cannan.
Why it matters
The February listing confirms which of the two hearing windows identified in July will be used. On 2 July 2026 it said the challenges would be heard on 14 to 18 December 2026 or 16 to 26 February 2027, depending on whether applications for further expert evidence or disclosure were made and succeeded. The Tribunal has now granted expert permissions and ordered further disclosure, and the final hearing sits in the February window.
The challenges concern the redress scheme introduced through PS26/3 for motor finance customers treated unfairly between 2007 and 2024. On 2 July 2026 the Tribunal suspended parts of the scheme on terms agreed between the FCA and the four challengers. The October directions concern disclosure, evidence and case management. They are not a new substantive decision on redress and contain no direction on the suspension.
The expert evidence permitted for the lender applicants goes to whether there is evidence that each Relevant Arrangement harms consumers, whether actual loss could have been assessed, whether consumers would have acted differently had captive lenders disclosed those arrangements, and whether captive lending should have been treated differently from third-party lending. The FCA has separately said the challenge includes how the scheme's exception for contractual ties works. These are issues for examination, not findings against either side.
What firms need to know
Further disclosure - Paragraph 1 requires the FCA to give further disclosure of the loan-level dataset, Data Drop 1 and Data Drop 3. It must also disclose the DCA Commission Model Impact Analysis, including the code or scripts underlying its matching methodology, and the DCA Commission Model Ban Impact Analysis. The parties must seek to agree the terms of a confidentiality direction covering that disclosure and tell the Tribunal what is or is not agreed. No confidentiality direction has yet been made. This is disclosure within the proceedings, and the order does not provide for the materials to be published.
Economic evidence - Two of the lender applicants may together rely on evidence from a single economist. The order defines Relevant Arrangements as DCAs, HCAs and Tied Arrangements. The expert may address:
whether there is evidence to support the view that the existence or inadequate disclosure of each Relevant Arrangement results in harm to consumers, and the adequacy of the FCA's evidential basis for that view, including what further evidence or analysis could have been undertaken;
whether the FCA could have assessed the nature and extent of actual loss caused by inadequate disclosure, individually or market-wide; and
whether the schemes could readily have been modified to target unfairness, harm or loss more accurately, including in terms of accuracy, feasibility and practicality.
The third lender applicant may rely on a separate economist on four issues:
how the captive segment of the market is identifiably distinct from third-party lending;
whether, and to what extent, the FCA identified and took account of those differences in designing the schemes;
whether there is any economic rationale for treating the market as homogeneous in determining redress; and
whether there is any economic basis to conclude that consumers would have behaved differently, and avoided loss, had captive lenders disclosed Relevant Arrangements.
Consumer Voice may rely on the reports identified as Gudat 1, 2 and 3 (Dr Nils Gudat) and Bagci 1 (Dr Pinar Bagci). The order does not describe what those reports cover. The FCA may rely on a single economist in response to the applicants' expert evidence.
Timetable
The parties must seek to agree a timetable for the FCA's further disclosure, for expert evidence and for general case management. The disclosure itself is already ordered. If they cannot agree the confidentiality direction or the timetables for disclosure or expert evidence, the Tribunal will list a half-day case management hearing by video. Any party may also apply at any time for a hearing on short notice.
Paragraph 10 fixes the start of the final hearing, but the order does not say when judgment will follow. In July the FCA said it expected judgment in the months after the hearing.
What firms should do now
Compliance officers should distinguish litigation milestones from operative regulatory requirements. The October order does not impose new complaint-handling or redress duties on firms generally, and it contains no direction lifting the partial suspension. Firms must still comply with the scheme rules that are not suspended.
The order's disclosure and timetable directions apply to the parties to the proceedings, not to the wider market.
The FCA expects lenders to keep complainants updated, including on when the challenge will be heard. With the December window gone, firms should check that complainant communications reflect the February listing.
Internal updates should identify which propositions remain contested. Permission to rely on expert evidence is not acceptance of an expert's conclusions. Planning records should reflect the February listing without presenting it as a date for judgment or scheme implementation.
Key Takeaways
Reflect the nine-day final hearing listed from 16 February 2027 in governance reporting and complainant updates. Do not present it as a judgment or implementation date.
Keep the October directions separate from the partial suspension. The order addresses litigation procedure and contains no direction lifting the suspension, and the rules that are not suspended still apply.
Track further directions on confidentiality and on the disclosure and expert evidence timetables. If the parties cannot agree, the Tribunal will list a further case management hearing.
Describe harm, loss, consumer behaviour and captive-lending differences as contested issues. The Tribunal has permitted expert evidence on them but has not resolved the challenges.
Distinguish general compliance monitoring from party-specific directions. The FCA's obligation to disclose documents to the parties is a litigation step, not a new obligation on motor finance firms.
If you would like support in this area please get in touch with the Auxillias team via the details on this page.
