UK FCA progress statement on motor finance compensation scheme consultation

The UK Financial Conduct Authority (FCA) has published a progress statement on its proposed motor finance consumer redress scheme consultation, following the UK Supreme Court ruling on 1 August. In the statement, the FCA confirms that the consultation deadline has been extended from 18 November to 12 December. The FCA also confirms that it has been actively engaging with stakeholders and has received feedback on key issues, including on the methodology for calculating redress, the time period for the scheme, the rate of compensatory interest, how independent mechanisms will ensure confidence, including the role of the Financial Ombudsman Service and ideas for alternative approaches, and fraud prevention. It urges respondents to provide detailed evidence and alternative suggestions where they disagree with proposals, all of which will be considered before final decisions are made.

Final rules are still expected in early 2026 but the FCA confirms this will now be February or March. While some complaints have been paused since January 2024 and the FCA has consulted on extending this pause beyond 4 December 2025, the consultation is now closed and the FCA is considering responses. However, the FCA stresses that complaints cannot remain paused indefinitely and lenders are therefore encouraged to maintain momentum to deliver certainty for customers and the wider market.

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