AI in financial services: control, evidence and regulation
The FCA will set out its approach on
20/04/26
Read more
Motor finance redress: the clock starts Monday
The FCA will set out its approach on motor finance redress shortly after markets close on Monday 30th March 2026, having consulted on a compensation scheme in October 2025. For motor finance creditors, this is not the end of a long process, it is the starting gun on one of the most operationally demanding remediation exercises the consumer credit sector has ever faced.
£11bn
Total industry redress estimate
14m
Agreements in scope (2007-2024)
~700
Average payout per agreement
An implementation period of three months is expected from the date final rules are published, with up to five months for older agreements, meaning scheme commencement is likely by end of June 2026. That is an extremely tight window to stand up a compliant, auditable, consumer-facing redress operation.
Key dates at a glance
- 30 March 2026: FCA publishes final rules and policy statement after market close
- Within 6 weeks of launch: Firms must submit redress delivery plan to the FCA (accountable SMF sign-off required)
- 31st May 2026: Complaints handling pause expires, firms must begin issuing final responses
- End of June 2026: Expected scheme commencement date (three months post final rules)
- End of 2026: FCA expects millions of consumers to begin receiving compensation
The scale of what’s coming
The scheme covers regulated motor finance agreements entered into between 6th April 2007 and the 1st November 2024, where commission was paid by the lender to the broker. Three types of arrangement are in scope:
- Discretionary Commission Arrangements (DCAs): where brokers could adjust interest rates to increase their commission
- High commission arrangements: where commission equalled or exceeded 35% of the total cost of credit and 10% of the loan
- Exclusive contractual ties: where brokers had near-exclusive relationships with lenders
With no de minimis threshold and compensatory interest payable at Bank of England base rate plus 1%, the financial and operational exposure for creditors is substantial. The FCA has confirmed it will monitor delivery through quarterly management information return and expects all remediation activity to commence promptly after go-live.
What creditors must do now
The FCA has been unambiguous about what it expects firms to have been doing during the consultation period and what comes next the moment final rules are published. Four areas demand immediate and parallel action:
Data readiness: Create a single source of truth for all motor finance products back to 2007. Complete data profiling and gap analysis across customer, loan, commission and complaint records.
Governance and accountability: Appoint an accountable SMF with oversight responsibility. Build a structured project plan with three lines of defence assurance. Prepare the FCA delivery plan (due within six weeks of scheme launch).
Redress calculation readiness: Build and test redress calculation engines using the FCA’s prescribed methodology. Compensatory interest at Bank of England base rate +1%. No de minimis threshold applies.
Complaint handling and triage: Investigate and progress complaints within the pause now. Categorise by scheme/non-scheme scope. Retain all relevant records until 11 April 2031.
The supervisory stakes
The FCA has made clear this scheme will be actively supervised. Quarterly management information returns, a six-week delivery plan submission deadline and a complaints handling pause that expires on 31st May 2026 all point to a regulator that expects firms to be ready and not reactive.
Firms that are not operationally prepared face a compounding risk where complaint volumes are expected to accelerate sharply once the scheme launches. The FCA has continued to advise consumers to complain now and signal creditors who fall behind will face both consumer harm exposure and direct regulatory intervention.
The stakes are also commercial. Firms such as Lloyds have already set aside provisions approaching £2 billion and Close Brothers has announced significant workforce reductions. The financial impact of poor operational readiness extends well beyond the redress payments themselves.
TCC Group’s financial services remediation specialists have deep experience supporting creditors through complex, high-volume redress programmes. We can support you at every stage of the motor finance scheme starting this week.
- Governance design: SMF accountability frameworks, project governance structures and FCA delivery plan preparation
- Data gap analysis: End-to-end data profiling across loan, commission and complaint records from 2007 to 2024.
- Redress calculation assurance: Build, test and audit redress calculation engines against the FCA’s prescribed methodology
- Complaint handling frameworks: DISP-compliant triage, categorisation and response frameworks for scheme and non-scheme complaints
- FCA MI reporting: Design and implement quarterly MI reporting packs to meet FCA monitoring requirements
- Three lines of defence assurance: Independent assurance across all stages of scheme delivery from data through to customer communication.
The rules land on Monday. The six-week delivery plan clock starts immediately. To discuss how TCC Group can support your motor finance redress programme, get in touch now.