Mercedes-Benz and two other lenders have moved to challenge the financial watchdog’s compensation scheme for motorists who were mis-sold a car loan.
The Financial Conduct Authority (FCA) will face a legal battle over its redress programme, after a group representing consumers also lodged an appeal.
It comes days after several of the UK’s biggest 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 German carmaker is exposed to the car finance mis-selling saga through its financial services arm.
When should you hear from your lender on our car finance compensation scheme? 🚗
— Financial Conduct Authority (@TheFCA) April 2, 2026
We’ve got a useful tool to help you find out when you should expect to hear, based on when you took out your loan and when you complain. https://t.co/2xIq1uTmrK#CarFinance pic.twitter.com/kYAMrGocKp
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”.
