In the FCA’s recently published release, Key considerations in implementing a possible motor finance consumer redress scheme, shared on 5 June 2025, the regulator highlighted crucial factors that firms need to consider as they prepare for a possible consumer redress scheme in motor finance.

This communication includes understanding potential complaint volumes, ensuring robust data and record-keeping and developing adequate resourcing and remediation strategies. Early preparation is crucial for managing the operational and regulatory challenges that may arise.

Navigating regulatory pressures in motor finance

The motor finance sector is under heightened regulatory scrutiny, with two pressing issues taking centre stage: the potential redress of Discretionary Commission Arrangements (DCAs) and a notable rise in complaints related to Affordability and Irresponsible lending. As the regulator signals a more defined approach and the Supreme Court’s decision looms, now is the time for motor finance firms to take action.

So, how can firms prepare for what lies ahead and strengthen long-term compliance?

Clarity emerging on discretionary commission arrangements

In March, the FCA announced that if the Supreme Court finds systemic failings in how DCAs were applied, a redress-only scheme – rather than a case-by-case, complaint-led model – is likely to be implemented. This direction provides some relief and clarity to firms, indicating a more structured and centralised remediation approach. With the Court expected to rule within the next month and the FCA to outline its post-ruling strategy shortly thereafter, firms should begin preparing the suggested scenario.

Affordability and Irresponsible lending complaints rising

Separate from the DCA review, motor finance providers are also facing a surge in complaints around Affordability and Irresponsible lending. These complaints, predominantly driven by Claims Management Companies (CMCs), fall outside the current scope of the FCA and the Supreme Court and demand an immediate response.

Firms must treat these two streams of redress separately yet with equal urgency to protect their financial health, operational stability, and reputation.

Steps to achieve operational readiness

Regardless of where your firm currently stands, these five actions are essential to prepare for both regulatory response and rising complaint volumes:

1. Define the affected customer base

• Identify in-scope customers and resolve data gaps or inconsistencies.
• Assess availability and quality of historical documentation while ensuring compliance with data protection requirements.

2. Strengthen processes, procedures and training

• Ensure policies are compliant, scalable, and aligned to regulatory expectations.
• Update training to support a well-governed, empathetic handling of customer remediation.

3. Develop a comprehensive customer contact strategy

• Prepare communications templates and contact methods.
• Plan for an increase in inbound customer queries across all channels.

4. Align operational capacity

• Ensure skilled resource is ready across all relevant teams, including customer service and redress processing.
• Model various complaint volumes to test operational resilience.

5. Leverage automation, workflow and reporting tools

• Implement scalable, tech-enabled solutions to streamline case handling.
• Build workflows and dashboards to improve visibility and ensure regulatory reporting readiness.

Get ahead with the right expertise and tools

Navigating dual regulatory challenges requires more than reactive compliance – it calls for strategic readiness. Partnering with independent experts can accelerate preparedness and strengthen delivery.

TCC brings a proven blend of regulatory experience, technological capability, and delivery execution

• Regulatory expertise: We help firms design compliant, customer-focused redress programmes informed by decades of experience.
• Automation and AI: Our custom-built AI solutions, created by our tech company Recordsure, deliver accuracy, reduce costs, and enable firms to manage high volumes with confidence.
• Proven execution: With over 20 years of experience delivering successful remediation projects, we mobilise quickly and deliver results efficiently.

Preparing your motor finance operations for regulatory change

The landscape is shifting – and fast. Regulatory outcomes from the DCA review and the growing wave of affordability complaints will define the sector’s near-term future. Those who act now will not only mitigate risk but emerge stronger and more resilient.

To explore how we can support your operational readiness, get in touch!