FCA Statement on Motor Finance Review – Possible Redress Scheme

The FCA has published a statement confirming that, if the Supreme Court concludes that motor finance customers have lost out from widespread failings, it will likely consult on a redress scheme. 

Following the Court of Appeal’s decision in October 2024 in the three test cases of Johnson v FirstRand Bank Ltd, Wrench v FirstRand Bank Ltd, and Hopcraft v Close Brothers Ltd, the possibility has been raised of widespread liability among motor finance firms where commissions were not properly disclosed to customers. Given the upcoming appeal in the Supreme Court from 1 to 3 April 2025, the FCA is seeking to provide as much certainty as possible to firms, particularly those who may be impacted by any future redress scheme.

The FCA considers that a redress scheme would be simpler for consumers than individually bringing a complaint; such a scheme would also reduce the need for claims management companies to bring claims on behalf of consumers. 

Next steps

The FCA will confirm within 6 weeks of the Supreme Court’s decision if it will propose a redress scheme. 

A separate review may also take place on any changes needed, as a result of the decision, to the FCA’s rules.

Firms should therefore prepare for changes to the FCA rules and consider the impact any FCA redress scheme may have on their business, including ensuring that senior management are kept fully aware.

This article was written by Matthew Pegler

We’re seeking to understand if firms failed to comply with requirements relating to DCAs and if consumers lost out as a result. If they have, we want to make sure consumers are appropriately compensated in an orderly, consistent and efficient way....Throughout our work, we will continue to consider how to make sure affected consumers are appropriately compensated and the motor finance market continues to work well, with effective competition, for the millions of consumers who rely on it every year.

https://www.fca.org.uk/news/statements/motor-finance-review-next-steps