Tag: Commission

Posted on

FCA publishes a statement on key considerations for any consumer redress scheme for motor finance commissions

Earlier today, on 5 June 2025, the FCA published a statement entitled ‘Key considerations in implementing a possible motor finance consumer redress scheme’. 

The key points from the statement are:

– If the FCA proposes “an industry-wide consumer redress scheme“, it’ll set out rules on how to assess claims and calculate redress.  The aim of the scheme would be to make it “easy for consumers to understand and participate in, without needing to use a claims management company (CMC) or law firm“.

– The FCA has been “speaking with consumer groups, firms and industry trade bodies to get their views on important issues to consider if we do introduce a redress scheme“.  If the FCA decides to propose a redress scheme, it’ll consult on why and explain how it thinks a scheme could work. 

– Given the pre-consultation engagement, the FCA “may decide to have a shorter than normal consultation window (for example, 6 weeks)“.

– There will be seven key principles:

(1) comprehensiveness: the scheme should be as wide “as possible so consumers don’t have to go elsewhere, like court“;

(2) fairness: the approach (both on breach and redress) should be “fair to consumers and firms“;

(3) certainty: providing finality for both firms and consumers;

(4) simplicity and cost effectiveness: easy for consumers to participate and the cost of delivering the scheme should be proportionate for firms;

(5) timeliness: resolve the majority of claims “within a reasonable timeframe“;

(6) transparency: consumers should receive clear explanations of decisions and data on the progress of the scheme should be publicly available; and

(7) market integrity: support the ongoing, long-term availability of high quality, competitively-priced motor finance.

– The FCA acknowledges that there can be tensions between these principles and it will aim to get the balance right.

– Scope of a redress scheme: some features to consider are: (a) opt-in or opt out and (b) calculating redress must be “fair to consumers who’ve lost out” and “ensure the integrity of the motor finance market” (and the FCA acknowledges it has seen some “highly speculative figures by some CMCs and law firms“)

– The FCA continues to say that it’ll “confirm within 6 weeks of the Supreme Court judgment whether we’re proposing to introduce a redress scheme. If so, we’ll also set out timings for when we would issue a consultation“.

– If the FCA proposes to introduce a scheme, the final rules for any scheme would “be in 2026“.  The FCA is also keeping under review whether to make any changes to its Handbook.

Posted on

FCA issues statement on its next steps in its motor finance review

Earlier today, on 11 March 2025, the UK Financial Conduct Authority (the FCA) published a statement on its next steps in its motor finance review. The FCA says:

– If, taking into account the Supreme Court’s forthcoming decision on the appeal from the Court of Appeal’s decision in Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2024] EWCA Civ 1282, it concludes motor finance customers have “lost out from widespread failings by firms, then it’s likely we will consult on an industry-wide redress scheme“;

– Under a redress scheme, “firms would be responsible for determining whether customers have lost out due to the firm’s failings. If they have, firms would need to offer appropriate compensation. We would set rules firms must follow and put checks in place to make sure they do“;

– The FCA no longer plans to make a further announcement in May 2025. Instead, the FCA will confirm its position “within 6 weeks of the Supreme Court’s decision if we are proposing a redress scheme and if so, how we will take it forward“; and

– The FCA’s next steps on non-discretionary commission arrangements will also be informed by the Supreme Court’s decision.

There are some interesting points from this statement:

– The statutory test under Section 404 of the Financial Services and Markets Act 2000 refers to it appearing to the FCA “that there may have been widespread or regular failure by relevant firms to comply with requirements applicable to the carrying on by them of any activity“. The FCA’s statement that it may (depending on the circumstances) consult on such a scheme is therefore a simple re-statement of part of the test for a consumer redress scheme under the statutory provisions.

– It is unsurprising that the FCA will not make an announcement in May 2025: this seemed inevitable once the lenders were given permission to appeal by the Supreme Court in December 2024.

– There is no mention of the appeal to the Court of Appeal from the High Court’s decision in R (Clydesdale Financial Services Limited) v Financial Ombudsman Service [2024] EWHC 3237 (Admin). This has a ‘hear by’ date of 8 December 2025 and the Court’s consideration of the FCA’s rules and guidance in the Consumer Credit Sourcebook must (it is submitted) be part of the FCA’s wider consideration of whether there has been “widespread or regular failure“.