One Week On: The FCA’s Motor Finance Consultation — and the Debate Is Getting Louder

It’s now one week since the FCA opened consultation on its proposed motor-finance consumer redress scheme. Far from quietening, the debate is intensifying. Trade bodies are mobilising, lenders are reassessing provisions, and manufacturers’ captive finance arms are reportedly seeking meetings with the Treasury.

The consultation window is short, the stakes are high, and every lender, broker and dealer now needs to balance engagement in the policy debate with practical preparation on the ground.

What the Paper Is Really Doing

The consultation sets out a rules-based redress framework covering regulated credit agreements from 2007 to 2024 where a commission was paid and disclosure fell short. It focuses on three key risk signals:

1. Discretionary Commission (DCA) – where brokers could vary the rate and retain the margin.

2. High Commission – where total commission exceeded 35 % of the total cost of credit and at least 10 % of the loan amount.

3. Tied or Exclusive Relationships – where the broker was limited to a single lender, but the customer was not told.

   
   

If any of these applied and were not properly disclosed, the relationship is likely to be deemed unfair, and a defined remedy will follow.

The FCA’s design aims to reduce argument and drive consistent outcomes at scale.

• Johnson-type cases (mirroring the Supreme Court judgment) would receive repayment of the commission plus compensatory interest, unless the APR-adjustment remedy pays more.

• All other cases follow a hybrid method, averaging a commission-based figure with a loss-based APR adjustment grounded in the FCA’s econometric analysis.

  
  

The paper also demands strong governance and transparency: a named Senior Manager accountable for delivery, a six-week delivery forecast after final rules, and monthly MI reporting — possibly with limited public disclosure of firm-level performance.

The Noise Isn’t Fading — It’s Organising

The industry is far from settled. The Finance & Leasing Association (FLA) has voiced major concerns and is preparing a comprehensive response challenging scope, proportionality, and methodology. Expect firm resistance on look-back length and data feasibility.

Manufacturers’ captive finance providers are now escalating the issue politically. Reports suggest BMW Financial Services is seeking direct discussions with the Chancellor to address policy implications — a clear sign this has reached Treasury level.

Lenders are also revising provisions. Lloyds Banking Group has added £800 million, taking its total redress reserve to around £2 billion. Close Brothers has become the latest to react, nearly doubling its motor-finance provision and publicly criticising the FCA’s proposed approach. Other institutions are reviewing their exposure. This remains both a regulatory and a financial moving target

The CMC Channel Is Being Policed — and That Matters

Alongside the consultation, the FCA issued Dear CEO letters to lenders, brokers and claims-management companies (CMCs).The CMC letter tightens expectations around promotions, urgency and success-rate claims, fee transparency and cooperation. It makes clear that speculative or duplicate submissions will not be tolerated.

At the same time, the FCA launched a consumer campaign stressing that customers do not need to use a CMC or law firm to make a claim. This dual move — policing intermediaries and simplifying direct routes — is meant to calm the system. For firms, it brings new pressure: if the regulator promises a simple, direct process, your operation must deliver one.

Data Reality: 2007 to 2014 and Beyond

Reaching back to 2007 is the biggest operational challenge. Many lenders have changed platforms, decommissioned systems or archived paper records. Yet the FCA expects firms to identify every in-scope agreement and calculate redress fairly.

Success now depends on data discipline and defensible assumptions.

What good looks like

• Map what you hold and what you don’t. Catalogue the key fields you’ll rely on and record every gap and reason.

• Define permitted substitutes. Where data is missing, specify the alternative input you’ll use and the rationale.

• Separate critical data from nice-to-have. Focus remediation on fields that move outcomes and document every assumption.

• Create a broker/dealer evidence lane. Standardise requests, offer secure upload, and track responsiveness in MI.

• Keep an “assumptions log” for each cohort — what was assumed, why, and the potential financial impact.

  
  

This is not about perfection. It’s about building a fair, repeatable, explainable process that stands up to scrutiny.

Legal Challenge Risk: Build for Change, Not for Chaos

There is now a real prospect of legal challenge or judicial review to parts of the FCA’s final rules. Trade bodies and lenders may argue over proportionality, data feasibility, or the fairness of the hybrid methodology.

That possibility should not halt planning — but it should shape design. Build flexibility in from day one.

How to future-proof

• Parameterise the calculator. Keep thresholds, rate effects and interest rates as editable variables, not hard-coded values.

• Version your communications. Prepare variants of customer letters that can be swapped in quickly if rules or timings shift.

• Design MI for multiple scenarios. Show current numbers and how they would change if assumptions move.

• Maintain governance evidence. Record why you acted as you did under the rules as published — crucial if the landscape changes.

• Plan for a controlled pause and restart. Document how you would manage customer communication if a judicial review delays implementation.

  
  

In short: stay agile. Deliver readiness now, but make it configurable.

What’s Clear After Week One

Four realities are already fixed.

1. Scrutiny will be intense — and public. Between trade-body submissions, Treasury engagement and market disclosures, assume your early numbers and narrative will be read beyond the FCA. Prepare your first delivery and MI pack as if it could be quoted in public.

2. Data is the new battleground. Gaps, inconsistencies and weak lineage will drive cost, delay and challenge. Data readiness is now the defining factor between control and chaos.

3. The scheme rewards consistency over argument. It's prescriptive for a reason: to end endless case-by-case disputes. The differentiator will be how cleanly you triage, how defensible your calculator is and how coherent your MI looks under audit.

4. The CMC lane will stay supervised. Expect swift regulatory action against poor behaviour. Build structured cooperation with reputable CMCs and escalation routes for the rest.

Five Moves to Make This Month

1. Name the owner and set the cadence. Appoint the Senior Manager accountable for scheme delivery. Lock the rhythm with operations, legal, compliance and finance. Decide what’s tracked weekly and what escalates immediately.

2. Design a single, fair intake. Create one front door for all scheme cases and related complaints. Keep it simple, digital-first and friction-free. Offer a clear, no-fee route for customers alongside any representative channel.

3. Freeze the decision tree before you code. Write the logic in plain English first. Map the “higher-of” rule for Johnson-type cases and the hybrid for others. Define how early settlements and missing data are handled. Add QA where human review adds value.

4. Stand up a broker and dealer response desk. Treat evidence gathering as a repeatable workflow. Standardise requests, create secure upload routes and track responsiveness. Build cooperation metrics into your MI.

5. Prepare the numbers and the narrative together. Your first delivery forecast should tell a coherent story — starting populations, data sources, calculator readiness and payment capacity. Draft the public version now; you’ll need it later.

How Profexx Helps Firms Get to “Ready”

Profexx is built for operational readiness and delivery. We combine practical design, rapid mobilisation and a secure Case Management System (CMS) purpose-built for large-scale remediation. The platform manages intake, triage, calculation, decisioning, payment and MI — all in one auditable, configurable environment.

Around that technology sits our specialist partner network across legal, data and communications disciplines, giving clients end-to-end capability without the overhead of multiple suppliers.

• Rapid Readiness Review - A short, focused diagnostic covering governance, data, calculator logic, broker/dealer workflows, communications and MI. You receive a sequenced plan ready to execute.

  
  

• SMF Attestation Support - We prepare the Senior Manager to sign with confidence — clear RACI, control notes, attestation pack and rehearsal of the delivery forecast.

  
  

• Calculator Design and Assurance - We translate the FCA methodology into a decision tree your engineers can build and your lawyers can sign. QA scripts, exception handling and sampling prove fairness without slowing progress.

  
  

• Data Readiness and MI - We assess completeness, design interim solutions for missing inputs and build the MI pack that links intake, decisions and payments.

  
  

• Customer Journeys and Communications - Letters, web copy and digital flows that reduce confusion, manage vulnerability and make the direct route effortless.

  
  

• Broker and Dealer Engagement - A repeatable workflow for third-party evidence — proportionate requests, tracked responses and clear escalation.

  
  

• Case Management System Deployment - Our CMS integrates everything — process, data, workflow and MI — so you can scale quickly, stay compliant and evidence fairness throughout.

The Bottom Line

The debate is getting louder. The FLA, lenders and manufacturers are pushing back hard, and the Treasury is now in play. Legal challenge is possible. Data gaps are certain.

Your best defence is readiness: a configurable operating model, reliable data, a defensible calculator and a transparent customer journey.

That’s what Profexx delivers — turning regulatory complexity into operational clarity.

When the rules land, be ready to move!

Dan Richards

CEO | Profexx Partners

Remediation. Reimagined.