Mercedes Benz joins legal battle over £9bn motor finance scheme
Mercedes Benz is confirmed to be among the four legal challenges lodged against the UK financial watchdog’s motor finance redress scheme.
The financial services arm of the German car giant is set to challenge the scheme that puts the car finance industry on the hook for £9.1bn in compensation.
The carmarker has thus far set aside £400m in payouts for the scandal, which relates to the use of ‘secret’ commission agreements between car dealers and lenders that left consumers in the dark.
In a statement to CityAM, the Financial Conduct Authority confirmed it had “received challenges from 3 lenders in addition to the challenge from Consumer Voice, represented by Courmacs Legal.”
The watchdog added: “We are considering our approach and will set out more later this week.”
Mercedes Benz confirmed it had “appealed against the FCA’s proposed redress” in a statement to Sky News.
Lloyds Banking Group – which has set aside £2bn in payouts – said whilst it was “disappointed” it would not challenge the scheme. On Wednesday morning, Santander raised its provisions to £640m leading to a first-quarter profit hit. The Spanish banking giant has also confirmed it will not challenge the scheme.
But additional carmarkers including the likes of Volkswagen Financial Services, which has not yet made any provisions in its accounts for the saga, are also gearing up to challenge the scheme alongside Mercedes, according to Sky News.
Banks turn away from legal action
Whilst banks have rowed back from another legal showdown, compensation claimant group Consumer Voice has confirmed it is launching action against the Financial Conduct Authority (FCA).
The group argued the regulator had excluded the “vast majority” of complaints from its scheme through its application of the Supreme Court ruling from August 2025.
The UK’s top court ruled in favour of the banks on two out of three cases but left the door open for an industry redress scheme after finding one claimant’s commission was outsized on the grounds of “unfairness”.
The motor finance industry’s trade body the Finance and Leasing Association has confirmed in the last week it will not challenge the FCA.
The group said it has “concerns about aspects of the scheme” but its priority was a “practical solution” being reached in “timely” fashion.
The regulator has said its redress scheme is the “quickest, fairest way” to compensate consumers.
“It seems contradictory that organisations claiming to represent consumers would seek to delay payouts for millions of people,” it added.