Bite-size: Auxillias Bite-size: FCA feedback on motor finance redress plans
The FCA sets out what good implementation looks like as the next scheme deadline approaches
What has happened
The FCA has published good and poor practice feedback on the scheme implementation plans submitted by in-scope motor finance lenders under the Motor Finance Consumer Redress Scheme. Firms submitted plans approximately six weeks after the scheme rules were published under PS26/3 on 30 March 2026. The FCA reviewed each plan against six delivery areas, including operational readiness, and has now set out, with worked examples, what stronger and weaker implementation plans looked like.
Why it matters
This is a point-in-time assessment of plans submitted around mid-May 2026, not a final verdict, but it gives firms a direct benchmark against live supervisory expectations. Scheme 2 (agreements from 1 April 2014) is already live from 30 June 2026, and Scheme 1 (agreements from 6 April 2007) takes effect from 31 August 2026. The FCA notes that most firms understood the scheme's requirements at a high level, but many plans lacked enough delivery detail for the FCA to assess whether obligations would actually be met. It says it will continue engaging where plans remain underdeveloped, and some firms may be asked for further detail.
What firms need to know: five areas the regulator is testing
Population identification. Firms should evidence how the starting population was derived, validated and reconciled with their one-off data submission and forecast, with a documented approach to identifying and remediating data gaps, and a clear rationale where a firm decides internal data is sufficient without relying on broker records.
Case grouping and group-based decision making. Firms should show a clear decision-making framework distinguishing automated and judgement-based decisions, defined cohorts tied to eligibility criteria, worked examples or process flows, and documented audit trails for how time-barring and rebuttal decisions are reached and quality assured.
Redress calculation and payment. Firms should explain the end-to-end calculation process, including calculator logic, testing and validation, controls for manual calculations, and payment processes covering identity verification, fraud checks and reconciliation.
Quality assurance and oversight. Stronger plans set defined sampling approaches, thresholds and escalation triggers, feedback loops to correct and prevent recurring issues, and oversight extending to third-party, outsourced and automated processes.
Multiple representative handling. Firms should identify cases involving more than one representative early, check representative authority remains valid, communicate clearly where representation is unclear, and follow the steps set out in the FCA's Dear CEO letter of 4 February 2026.
What firms should do now
Compliance teams should map their live build against each of the five areas above, testing specifically whether they can evidence population figures, show worked decision examples, demonstrate calculator validation, and produce quality assurance sampling data. Firms nearing the 31 August 2026 deadline should treat any gaps as an immediate priority. All firms should keep their named Motor Finance Supervisor updated on material developments in calculators, third-party assurance, audit arrangements and contingency planning.
Key Takeaway
1. Evidence population data. Firms must show how the starting population was derived, validated and reconciled, not just stated as a figure.
2. Show decision frameworks. Case grouping decisions, including time-barring and rebuttals, need a documented, auditable methodology, not just a governance description.
3. Validate calculators. Redress calculation tools must be tested and evidenced, with manual processes properly controlled and payments checked for fraud and duplication.
4. Build real quality assurance. Sampling, thresholds and escalation triggers must be explicitly defined, not assumed from business-as-usual controls.
5. Resolve representation early. Multiple representative cases need prompt identification and authority checks, following the FCA's 4 February 2026 Dear CEO letter.
How Auxillias can help
Auxillias is already supporting motor finance clients with the legal, compliance, governance and operational work needed to prepare for and implement the redress scheme. This includes reviewing scheme implementation plans against FCA requirements, supporting governance and board oversight, testing decision-making and quality assurance arrangements and helping firms address gaps in their processes and controls.
Our team can also support firms with population and data issues, case grouping, redress methodology, third-party oversight and the records needed to show how key decisions have been made and checked. As firms move from planning into live delivery, we can provide added resource and specialist support to help teams meet the scheme requirements and respond to FCA feedback.
If you would like support reviewing your current arrangements against the FCA's latest feedback or help with any part of scheme delivery, please get in touch with the Auxillias team via the details on this page.
