FCA to announce redress scheme details on March 30

The Financial Conduct Authority (FCA) has announced it will set out its approach on motor finance redress shortly after markets close on Monday 30 March, having consulted on a compensation scheme in October 2025.

The details have been eagerly awaited by the auto finance sector, with FCA estimates suggesting the final bill for compensation could hit £8.2bn in payouts  to consumers which, added to the administration costs of running the programme, means lenders are on the hook for around £11bn. 

Of this, the regulator estimates suggest captives would have to pay about half. The Financial Times reported earlier this year that there may be a move to exempt captives from having to pay compensation to at least some customers where the key issue was failure to disclose the lender’s link to the dealer.

The FCA has already released details of changes to its original proposals in light of representations from a number of bodies including the Finance & Leasing Association. These include removing the requirement for firms to contact customers who have already logged a complaint to ask if they wish to opt out, and allowing firms to use a range of channels for customer contact rather than mandating recorded delivery.

In addition, there is to be a three-month implementation period once the details of the scheme are known, rising to up to five months for “older agreements”, although these are not defined. Currently the scheme is set to consider complaints dating back to 2007.

“Many will be hoping that the regulator has taken onboard the industry’s concerns and will reveal a redress approach which is proportionate to the consumer’s actual financial loss. At Finance Connect we stand ready to provide advice and interpretation as soon as the policies are published.”

Further details on a special Finance Connect webcast will be announced following the Financial Conduct Authority’s update, bringing together industry experts to discuss the implications and next steps.