Mercedes and Volkswagen said to be challenging scheme that offered £829 average payout

Consumer groups and solicitors say payout was not enough and call for judicial review

Millions of consumers face an uncertain wait over whether they will be able to claim compensation over mis-sold car loans as car giants mount a legal challenge.

The Financial Conduct Authority (FCA) announced a redress scheme in the region of £7bn to compensate drivers who were mis-sold car finance following a Supreme Court case, won by HD Law last August.

That case challenged the unfair levels of undisclosed commission paid by lenders to car dealers for car finance agreements. It was successfully argued by HD Law that payments of these undisclosed commissions created unfair relationships.

Consumers were pushed into deals that were not necessarily in their best interests.

Now a new legal battle is brewing as both campaign group Consumer Voice and car finance firms have challenged the FCA scheme which is an attempt to apply a policy to its compensation rules.

Consumer Voice claims the proposed compensation - averaging £829 per agreement - falls well short of what millions of motorists are owed. It also raises concerns that restrictions on eligibility and interest payments could significantly reduce what consumers ultimately receive.

Now Mercedes has confirmed that it has mounted a challenge and Volkswagen and Credit Agricole are also reported to have asked for a judicial review.

If the courts agree to hear the case, the rollout of compensation will be paused, although the case is expected to be fast-tracked given its national significance.

The solicitor who won the initial Supreme Court case, acting for Mr Johnson, has welcomed the challenge from Consumer Voice but expressed concerns about the giant car loan firms trying to gain an advantage.

Kevin Durkin, Solicitor and Director at HD Law, said: “This scheme was flawed and unbalanced from a consumer perspective from the off, so it is only fair and right that is now challenged and scrutinised in the courts.

“In the short term, drivers could face more delays to payouts - but if the Consumer Voice challenge succeeds, compensation levels may rise substantially.

“However, it beggars belief that the lenders - who have been favoured with a watered-down compensation scheme - are now pushing the courts for even more concessions. It almost seems a bit cheeky.

“In my opinion it appears FCA has bent over backwards to keep the banks happy and onside, at every touch and turn. The vast alterations to the scheme, following the schemes consultation paper, were done in the lenders favour but it appears that’s still not enough for them.

“They want to keep even more of the profit they have wrongly put in their pockets and not give it back to their customer.

“In 2025, Volkswagen made £277 billion in car sales and Mercedes generated £112 billion in revenue - yet they are apparently unhappy with the reduced burden on them and want to challenge the FCA scheme. It smacks of greed.”

Mercedes said: "Mercedes Benz Group can confirm that it has appealed against the FCA's proposed Redress Scheme. Given that this is subject to ongoing legal proceedings, we cannot comment further."

Volkswagen has not confirmed that has appealed but many lenders - including Santander, Barclays and Lloyds Banking Group have accepted the FCA’s amended scheme.

The Financial Conduct Authority has defended its approach, describing the scheme as the “quickest, fairest way” to deliver compensation, while warning that legal action risks delaying payments to millions.

Kevin Durkin said: “For the FCA, which has dragged its heels for ten years investigating this issue, to complain about delays at this juncture smacks of hypocrisy.

“While it is true that a judicial review challenge may lead to a short delay of the scheme - the FCA ought to focus on consumers receiving fair redress.

“Even with the delay, surely it is better for consumers to be fairly compensated - than to rush it through to spare the blushes of multi-billion pound financial organisations?

“The FCA has tried to spin up the benefits of the scheme as being fair to the consumer. In my opinion that is not the case.

“This scheme would not even have been now in place were it not for the Supreme Court case HD Law won on behalf of Mr Johnson in August 2025.”

HD Law’s successful cases in court have resulted in average payments of more than £1,800.

-ENDS-

Notes to Editors

Who is Kevin Durkin?

Kevin Durkin, the solicitor who uncovered the national mis-selling scandal involving car loans, is the only lawyer in the UK to successfully take a car finance case to the Supreme Court and win.

Kevin led the landmark case brought by Marcus Johnson against FirstRand Bank leading to the beneficial legal precedents for consumers.

Kevin has always claimed that the regulator is systematically “lowballing” the public to protect bank liquidity.

Kevin Durkin, is Head of Legal Practice at HD Law.

He is available for further interview opportunities.

Please contact Lewis Lowery Communications on 07375919404 or email media@lewislowerycommunications.com to be put in touch with Kevin directly.

Logo

Images

Tags

More Like This

Consumer Voice to challenge FCA car finance compensation scheme that could short-change millions

Consumer Voice to challenge FCA car finance compensation scheme that could short-change millions

Consumer Voice challenges FCA car finance redress mechanism to seek £billions more for motorists

Consumer Voice challenges FCA car finance redress mechanism to seek £billions more for motorists

Millions of car finance customers left in limbo by watchdog’s blind spot

Courmacs Legal warns FCA car finance redress plans are fundamentally flawed by allowing lenders to act as judge and jury

Landmark Court Ruling Opens Door to Justice for Car Finance Victims - Lawyers Warn Against Lender-Led Redress Scheme

Supreme Court Ruling on Car Finance: Lenders are not in the Clear