The road ahead for the FCA's motor finance consumer redress for dealers

18 September 2026

Tags Financial services Banking & capital markets Insurance Insights

Although the FCA's latest feedback is aimed primarily at lenders, it has important implications for dealers. With firms expected to continue preparing despite ongoing legal challenges, dealers should take steps now to assess records, strengthen processes and prepare for future information requests.

When the FCA published its final motor finance consumer redress scheme in March 2026[1], it appeared to provide long-awaited certainty on how compensation would be delivered to customers impacted by historic motor finance commission arrangements. The scheme was designed to provide a consistent and efficient industry-wide approach to redress, reduce reliance on litigation and Claims Management Companies (CMCs), and bring closure to an issue that had been under regulatory scrutiny for several years. However, subsequent legal challenges from lenders and consumer representatives have led to parts of the scheme being suspended pending consideration by the Upper Tribunal. As a result, implementation timelines are likely to be delayed, with customer redress now unlikely to begin before 2027, creating renewed uncertainty for firms over the level of investment and preparation required.

Against this backdrop, the FCA's feedback on firms' implementation plans[2], published on 19 August 2026, provides greater clarity on its expectations during the suspension period. While the regulator found that most firms understood the scheme requirements, many plans lacked sufficient operational detail. The FCA expects firms to continue preparing[3] and to develop robust, end-to-end plans covering customer journeys, processes, systems, controls, governance, dependencies and contingency arrangements. Importantly, firms should view the current pause not as a reason to halt activity, but as an opportunity to enhance readiness, resolve complex implementation challenges and strengthen delivery plans ahead of any future scheme implementation.

Although the FCA’s feedback is directed primarily at lenders, its comments on broker engagement and dealer support create clear implications for dealers. The examples below illustrate that dealers should not wait for formal requests from lenders, but should begin considering how they can evidence, retrieve and provide the information needed to support the scheme.

“Firms have started engagement early. This includes testing whether relevant broker-held data exists, whether it is usable and how long it may take to obtain.” By contrast, the FCA also notes weaker practice where “firms defer key decisions on broker engagement until late in implementation”, increasing the risk that historic data is lost or cannot be obtained in time.

The FCA also highlights the need for lenders to assess whether their own internal data is sufficient and to document the basis for any decision not to rely on broker data. It contrasts this with weaker practice where firms indicate that broker data may be needed but do not explain what information is required, why it is needed, when brokers will be contacted or how the evidence will be used.

This article therefore focuses on the practical steps dealers should consider now, offering a simple guide to help them prepare for what may come next.

1. Locate and assess historic motor finance records

The FCA’s review places particular emphasis on understanding when broker or third-party data is required, what information is needed and how it will be obtained, assessed and controlled. Dealers and brokers should therefore establish an evidence-based view of the records they hold, and the practical steps required to retrieve them.

Map relevant historic data sources, including customer, agreement, proposal, commission and sales-process records where held.
Identify retention constraints, archived systems, manual records, legacy formats and known gaps.
Test retrieval rather than relying on assumptions that data is available or usable.
Document the scope, quality and limitations of available records, including the basis for any reconstruction or supplementation.

2. Engage with lenders early

The FCA identifies early engagement as stronger practice and warns against deferring key decisions on broker engagement. Early coordination should reduce the risk that relevant historic data is lost, cannot be obtained in time or creates avoidable rework.

Identify the lender relationships and agreement populations most likely to generate requests.
Agree the data fields, evidence standards, request format and secure delivery channel.
Set realistic response timelines that meet the regulatory requirements, progress reporting and escalation routes.
Surface limitations promptly so that lenders can develop appropriate contingency arrangements.

3. Establish a controlled evidence-response process

Broker evidence may be relevant to population identification, rebuttals, exceptions or other decision points. The FCA expects such evidence to be validated, reconciled to internal records and applied consistently. Dealers and brokers should create a repeatable process for locating, reviewing, approving and supplying evidence.

Nominate accountable owners for intake, data extraction, review, approval and submission.
Use consistent request and response templates so the reason for each data item is clear.
Record provenance, transformations, assumptions, quality checks and approvals.
Separate factual evidence from interpretation and avoid unsupported assertions.

4. Strengthen data governance, security and audit trails

The FCA highlights secure channels, controlled workflows, access controls, audit trails, retention arrangements and governance over evidence ingestion. These expectations should shape how brokers exchange personal and financial data with lenders.

Use approved secure channels for transfer and restrict access to authorised personnel.
Reconcile what was requested, extracted, transferred, received and accepted.
Maintain version control and a clear record of corrections or resubmissions.
Apply appropriate retention and deletion arrangements to redress-related working data.

5. Prepare to support consistent decision-making

Lenders may use group-based or automated decision-making to process cases at volume. Broker-supplied data must therefore be structured and reliable enough to support consistent treatment, while allowing exceptions and edge cases to be identified.

Provide clear definitions and context for supplied fields or documents.
Flag anomalous, incomplete or conflicting evidence rather than allowing it to be treated as standard.
Support reconciliation between broker and lender records where differences arise.
Ensure evidence used for exceptions or rebuttals is capable of review and quality assurance.

6. Build capacity, escalation and contingency arrangements

The FCA expects firms to manage third-party dependencies and to plan for incomplete, delayed or unavailable data and services. Dealers and brokers should assess whether existing teams and systems can respond at the required scale.

Estimate likely demand across lender relationships and identify capacity constraints.
Train relevant staff on records, data handling, escalation and consumer-outcome considerations.
Define escalation triggers for missing data, unclear requests, legal issues and deadline risk.
Prepare contingencies for ceased trading entities, unavailable systems and records that cannot be recovered.

What should dealers do next?

The message for dealers is clear: preparation should start now, not when lenders begin issuing information requests at scale. Dealers should use the current period to engage with lenders, understand what data and evidence may be required, and assess whether their existing records, systems and processes are sufficient to respond efficiently and consistently. Given the variation in size, complexity and operational maturity across dealer networks, each dealer should take a practical view of its own readiness and determine whether additional support is needed to retrieve historic records, manage data quality, document limitations and maintain appropriate audit trails. Some dealers may be able to manage this internally, while others may benefit from targeted support to build confidence and reduce delivery risk.

The FCA has made clear that it expects firms to act in good faith and in line with its expectations. Dealers that begin these activities early will be better placed to respond when lender requests increase and to demonstrate that they have taken reasonable steps to support the effective delivery of any future redress scheme.

References:

[1] https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme

[2]Feedback on motor finance redress scheme implementation plans | FCA

[3]https://www.fca.org.uk/news/statements/legal-challenges-motor-finance-compensation-scheme-update-firms-consumers#section-contingency-planning

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