On 5 June 2025, the Financial Conduct Authority (FCA) published a statement setting out key considerations for a possible consumer redress scheme relating to discretionary commission arrangements (DCAs) in motor finance.

A Supreme Court ruling expected in July 2025 will be critical in determining whether such a scheme will be implemented. The FCA has made clear that if a redress scheme is needed, it will aim to deliver fair compensation to affected consumers while protecting the integrity of the motor finance market.

What the FCA Is Considering
The FCA’s guidance highlights important elements firms need to understand:

Enrolment Models: Opt-In vs Opt-Out
The FCA is assessing whether consumers should be automatically included in any redress scheme (opt-out) or required to take action to claim compensation (opt-in). Both have advantages and operational challenges, with fairness and customer engagement front of mind.

Fair and Evidence-Based Redress Calculations
Compensation calculations must be based on solid, evidence-backed data to ensure redress reflects actual consumer losses. The FCA warns against overly generous approaches that could risk lender stability or harm competition.

Timing and Regulatory Process
The Supreme Court’s decision in July 2025 will trigger a six-week window for the FCA to decide whether to consult on a redress scheme. If so, consultation periods will likely be expedited, with scheme implementation anticipated in 2026.

Market Stability
While delivering justice to consumers, the FCA emphasises the need to maintain a competitive and sustainable motor finance market.

Direct Consumer Access
To protect consumers, the FCA intends to minimise claims-management firm involvement, ensuring direct and timely access to compensation.

What Motor Finance Firms Should Do Now

Identify impacted customers: Gather and review historic data on discretionary commissions.
Review complaints and redress processes: Update complaint handling and prepare to implement a redress framework.
Test operational readiness: Ensure systems and teams can respond swiftly to regulatory requirements.
Prepare for FCA consultation: Engage stakeholders and develop internal strategies aligned with potential regulatory expectations.

Why Choose Product Partnerships?
We work with some of the UK’s leading motor finance providers—both Directly Authorised and those using Appointed Representative networks—to deliver strong governance, oversight, and fair customer outcomes.
We support firms with:

FCA readiness and documentation
Ongoing oversight of AR networks
Review of customer journeys and compliance frameworks
Regulatory change support, including redress design and implementation

Our hands-on expertise covers the entire motor finance product lifecycle, ensuring your business is compliant, resilient, and customer-focused.

Learn more about our motor finance experience

Ready to Prepare?
The FCA’s redress scheme, if confirmed, will require swift and comprehensive action. Product Partnerships can help you assess your exposure, refine your processes, and build a robust redress framework.

Get in touch today to discuss how we can support your preparation and compliance journey.

👉 Contact Our Compliance Experts - Product Partnerships

Preparing for the FCA’s Potential Motor Finance Redress Scheme