Timing of the FCA's motor finance announcement
Executive Summary
The FCA is scheduling its announcement on a proposed motor finance redress scheme—addressing historical commission disclosure failures in car loans—for shortly after markets close on Monday, 30 March 2026, following a consultation launched in October 2025. This matters because it signals imminent final rules that could impose up to GBP11 billion in costs on lenders, affecting millions of consumers and requiring urgent operational preparations to ensure timely payouts in 2026. #
What Changed
- - Introduction of a 3-month implementation period for most firms, extendable to 5 months for older motor finance agreements, to handle the scheme's scale and complexity.
- Streamlined consumer journey: Pre-scheme complainants no longer need to opt out; lenders must notify them of owed compensation within 3 months post-implementation, with immediate acceptance options available.
- Removal of mandatory recorded delivery for customer communications, allowing flexible channels with fraud safeguards.
- No final decision yet on proceeding, but likely modifications based on over 1,000 consultation responses, including backlash from lenders.
Suggested Considerations
- Review and prepare systems: Firms must gear up for redress calculations, notifications, and payouts within the 3-5 month implementation window; voluntary early processing encouraged.
- Monitor complaints: Advise customers to complain directly (avoiding CMCs to prevent 30%+ fee losses); process pre-scheme complaints under forthcoming rules.
- Assess provisions: Quantify exposure (e.g., GBP11 billion industry-wide estimate) and update financial reserves, as done by Santander/Lloyds.
- Compliance checks: Ensure communication channels meet fraud safeguards; cease non-compliant practices per FCA interventions.
- Stakeholder engagement: Track the 30 March announcement (confirmed date forthcoming) and respond to any residual consultation feedback.
Key Dates
Compliance Impact
Urgency: High – With the announcement just 6 days away (as of 24 March 2026), firms have minimal time to finalize preparations amid GBP11 billion cost risks, market disruption warnings, and lender pushback; delays could amplify redress delays, fines, or consumer harm claims.
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original FCA source before acting. Full disclaimer.
Summary
We will set out our approach on motor finance redress shortly after markets close on Monday 30 March, having consulted on a compensation scheme in October 2025.