Britain's Financial Conduct Authority said on Thursday parts of its motor finance consumer redress scheme had been suspended pending legal challenges brought by four parties.
The regulator introduced the scheme in March to compensate motorists who were treated unfairly under motor finance arrangements between 2007 and 2024. It previously estimated firms would pay around 7.5 billion pounds in compensation.
"The partial suspension enables firms to keep preparing for the scheme and progress complaints as far as possible, while avoiding work that may need to be repeated if the challenges succeed," the FCA said in a statement.
The decision means compensation payments to consumers who may be owed money under the programme will be delayed until the legal process concludes.
The challenge is due to be heard either in December or in February next year, with a judgment expected in the following months, the FCA said.
If the scheme is upheld, and barring any appeal, the FCA said it expects payments under the scheme to begin in 2027. But if the scheme is overturned in whole or part, the regulator said it would need to decide its next steps.
A revised scheme, assuming further legal challenges, would mean compensation could be delayed until 2028 or beyond.