Beyond the Judgment: Preparing for the Next Chapter in Motor Finance Remediation

The Supreme Court’s long-awaited decision in Johnson, Wrench and Hopcraft has now been delivered. For many in the motor finance sector, it brought a brief sense of relief, as the Court closed the door on bribery and fiduciary duty as routes to redress.

But for some, this is just the beginning. Attention has already turned to the unfair relationship provisions in Section 140A of the Consumer Credit Act (CCA) and, following the FCA’s rapid announcement, the potential widening of scope for a Section 404 redress scheme. For lenders, brokers and credit intermediaries, the question is no longer whether action will be required – it is how ready they are to navigate a challenging and evolving landscape.

From legal clarity to operational complexity

By removing fiduciary and bribery claims from the picture, the Supreme Court has simplified the legal battleground. Yet it has heightened the operational challenge. Future claims will be judged on their facts – the size and structure of commissions, the adequacy of disclosures, the presence of tied relationships, and the characteristics of the customer.

The Johnson case sets a practical benchmark but not a fixed template. In that case:

• A substantial commission of £1,650.95 was not disclosed, representing about 26% of the amount of credit and 55% of the total charge for credit.

• There was a contractual tie between the dealer and lender which was not disclosed to the customer.

• Commission disclosure was buried in the standard terms with no prominence.

• The consumer was unsophisticated and unable to realistically navigate the information provided.

  
  

These are the kinds of conditions the FCA will examine closely when shaping its redress framework, although they will not be the only factors considered.

What the ruling did not change

The judgment does not set a numeric line for “high commission”. It confirms that unfairness will turn on a combination of factors that include the size of commission relative to the loan or to the total charge for credit, how clearly it was disclosed, any commercial tie that limits lender choice, and customer characteristics. This is inherently fact specific by lender, broker and era.

The FCA’s next steps

Following the judgment, the FCA confirmed on 3 August that it will consult on a redress scheme. Firms do not have to provide a final response to relevant complaints before 4 December 2025, and the FCA has signalled it will consult on extending this to align with the scheme timetable. Consultation is widely expected in October, with implementation activity and payments from 2026.

The scheme is likely to:

• Cover both DCA and non-DCA arrangements.

• Apply a lookback period to 2007 (now under scrutiny following the House of Lords Financial Services Regulation Committee’s 8 August 2025 letter to the FCA).

• Require lenders to quantify actual loss in line with Section 404 criteria.

• Balance fairness for consumers with practical deliverability for firms.

  
  

The House of Lords FSRC and other stakeholders have asked the FCA to evidence the legal basis for a 2007 start and the modelling behind the £9–18bn range before the consultation closes. Scope and timing may evolve through scrutiny.

This is not just about meeting rules that will be published later; it is about preparing and showing readiness now.

Three overlapping pressures

Over the coming months, firms will need to manage three parallel challenges:

1) Readiness to deliver a redress scheme

Data completeness will be critical. Firms must be able to retrieve accurate records of historical commission arrangements. Loss calculation methodologies must be consistent, defensible and auditable. Resources, technology and governance arrangements should be in place well before the FCA sets its timetable. Bring broker and dealer evidence into scope early by cataloguing historic broker contracts, commission schedules, panels and MI by era, as these often provide the best surviving evidence of commission structures.

2) High-volume complaint handling

Complaint volumes are expected to rise from both customers and claims management companies (CMCs).  CMCs will adapt quickly, reshaping complaints to fit Section 140A arguments. Although fiduciary claims will disappear, overall volumes are unlikely to fall. The FCA will expect quality, evidence-based responses, and there is a real risk of contagion into other product areas. Keep responses proportionate and evidence-led and preserve a clean audit trail.

3) Litigation and SRA-regulated cases

Not all cases will fall within the FCA scheme or its jurisdiction. Firms should prepare for legal disputes and SRA-led complaint handling to run in parallel.

Avoiding windfalls while paying fair redress

The FCA has signalled that the consultation will test calculation options that reflect the degree of harm and market impacts. Expect debate over methodology, potential de minimis thresholds and interest approaches, plus guardrails on duplicate claims. Your calculator design should be flexible enough to implement each option that may be consulted on.

Readiness is more than a legal question

Legal interpretation is only the starting point. The real challenge lies in operationalising redress, so it is fair, efficient and scalable.

We assess readiness across six capability areas:

1. Legal and regulatory exposure, mapping risk across books and product types.

2. Complaint handling that can triage and resolve Section 140A complaints at scale.

3. Customer communications with the right clarity, tone and regulatory alignment.

4. Data readiness that tests completeness, accessibility and reliability of historic records.

5. Operational delivery with capacity to run a redress scheme alongside business as usual.

6. Governance and oversight that evidence board-level control and regulatory engagement.

   
   

Each area is scored using a granular RAG framework, producing a targeted action plan that meets both regulatory expectations and operational realities.

2007–2014 era playbook

Where records were lawfully deleted, make reasoned decisions with the best evidence available. Use customer-held documents, version-controlled terms from the era, broker contracts and MI, and document a reasonable search for each case. This creates the defensible audit trail regulators expect under DISP and any scheme rules.

The cost of waiting

Once the FCA publishes its consultation, response windows will be short. Firms that have not already segmented their books, tested data flows, designed loss calculation methodologies and assessed resourcing will be on the back foot, a position where compliance risk increases, stakeholder and consumer confidence can quickly erode, and reputational damage becomes more likely.

Acting now

We are already helping clients to:

• Carry out rapid readiness assessments to identify priority risks.

• Validate and enhance data sources to ensure accurate, timely retrieval.

• Build defensible methodologies for calculating redress.

• Integrate technology to streamline case handling.

• Design governance frameworks that meet the needs of boards, regulators and auditors.

  
  

This is not about over-preparing for a scheme that may change. It is about building the operational agility to respond effectively, whatever the FCA’s final rules look like.