FCA Breaks Its Silence on Motor Finance Redress
Today, the FCA has published a paper setting out proposed principles that will help shape the design and implementation of a possible motor finance commission redress scheme.
As the paper is pretty short and can be read quickly and easily, we didn’t think that there would be much value in summarising.
We did, however, have some immediate thoughts that we thought it worthwhile sharing:
The principles themselves are consistent with established remediation good practices and, therefore, should already be being taken into consideration by businesses that are on the front foot and thinking about potential approaches.
The FCA’s “Next Steps” section is notable — it says they will confirm within six weeks of the Supreme Court judgment whether a redress scheme will go ahead. While they stress no decision has been made, the level of detail in this update suggests they’re preparing as if a scheme is likely. This could reflect the strength of evidence gathered from motor finance firms, the tone of the Supreme Court hearing, or a sense that a regulatory intervention is inevitable.
Within the paper, the FCA outline their desire to move quickly once the Supreme Court judgement is issued and its clear that they will expect firms to be in a position to do the same; therefore, burying heads in the sand or inertia is not a viable option at this stage (and we do see some evidence of this based on our conversations across the market).
The FCA makes it clear that they may take a different approach to calculating redress than the Financial Ombudsman Service. This is quite a bold statement (even though it is qualified/limited slightly) and must provide an indication of the direction of travel. The FCA’s comment that they need to balance compensating customers that have suffered a loss and protecting the integrity of the motor finance market (an integral market is not one where firms go bust or withdraw or where motor finance prices go through the roof due to a shortage in supply) is interesting – and it will all hang on where the FCA deems actual/tangible detriment to have occurred and the financial losses that might have stemmed from that.
Linked to the above point, the FCA explicitly states that some of the redress claims that they have seen submitted by some CMC and law firms are ‘highly speculative’ which may provide a degree of comfort.
Conversations with the FCA suggest that everything that they now do needs to link back to the strategy and the key principles driving this. Within the paper, there does seem to be lot more emphasis on balancing the needs of consumers and firms than there have been in previous publications.
The FCA is inviting comments on the key principles and on certain aspects of any scheme (such as whether customers should be able to opt-in/out and the approach to redress calculations) and we may be in a place where firms will need to speak now or be prepared to forever hold their silence.
As a specialist regulatory consultancy, Avyse is uniquely placed to help firms navigate this critical period of uncertainty. We combine deep technical knowledge of financial regulation with hands-on experience delivering complex redress and remediation programmes — including in motor finance, PPI, and high-cost credit.
With the FCA actively seeking input from firms before shaping any formal redress scheme, now is the time to engage constructively and credibly. Firms that act early can help shape fairer, more practical outcomes — and reduce the risk of burdensome or unworkable requirements down the line.
We can help you prepare your input, backed by analysis, data, and a grounded understanding of your portfolio — giving you a voice in the regulatory process. At the same time, we support firms in assessing exposure, designing defensible redress logic, and preparing for operational delivery. Whether you're a lender, broker, or in wind-down, we’ll help you stay ahead of regulatory expectations and deliver fair outcomes that stand up to scrutiny.