UK FCA statement on potential changes to motor finance redress scheme

The UK Financial Conduct Authority (FCA) has announced it is proposing to make several changes to its planned motor finance compensation scheme, initially consulted on in October 2025 following the UK Supreme Court ruling on 1 August 2025. If the scheme goes ahead, the FCA indicates it is likely to publish final rules in late March, outside of market hours, and will confirm the date in advance. While final decisions have not yet been made, the FCA outlines several intended adjustments designed to streamline the consumer journey and make it smoother for firms to operate.

In response to consultation feedback and the scale and complexity of the scheme, the FCA is considering a three‑month implementation period, with up to five months for older agreements. Firms would have the option to begin processing claims under the scheme earlier should they wish to do so. The FCA also proposes several measures to streamline the process for consumers and firms:

• Removing the opt‑out requirements so consumers who complain before the scheme starts are no longer asked if they wish to opt-out, with lenders instead notifying consumers whether they are owed compensation, and the amount, within three months of the end of the implementation period.
• Allowing consumers to accept a redress offer immediately, without waiting for a final determination.
• Permitting firms to use a wide range of communication channels to write to consumers rather than relying solely on recorded delivery, with appropriate safeguards to prevent fraud.

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