The FCA has just published an update, confirming it would proceed to consult on a redress scheme under s.404.
At around 15:30pm this afternoon (3 August 2025), the FCA published an update, confirming it would proceed to consult on a redress scheme under s.404.
The FCA expects to publish its consultation in October 2025 with a view to the scheme coming into force and repayments commencing sometime in 2026.
The FCA’s announcement can be viewed at: https://www.fca.org.uk/news/statements/fca-consult-compensation-scheme-motor-finance-customers
Our key takeaways are:
The scheme will cover DCAs, and the FCA will also consult on which non-discretionary commission arrangements should be included, given the findings of the Supreme Court. This could be a positive and help firms to manage the significant volume of paused non-DCA complaints which accrued following the Court of Appeal’s decision.
The FCA’s redress calculation will be driven by degree of harm and the market impact, and will consider the option of payment of the commission. The FCA will also consult on whether there should be a de minimis threshold for compensation eligibility.
The FCA thinks the scheme should cover complaints back to 2007 (but may be limited in its ability to cover some complaints relating to agreements closed before 2014 without treasury intervention). It is consulting with government on achieving this goal.
No decision has been made on Opt-in vs Opt-out yet: this issue will be explored via the consultation.
The combination of high commission (as defined in the Johnson case) which is undisclosed is likely to take centre stage.
The total cost of redress to the market is unspecified but the FCA anticipates it being somewhere between £9bn and £18bn
The FCA currently estimates most individuals will probably receive less than £950 in compensation.
The FCA is anticipating awarding interest on compensation payments at around 3% (base rate for the relevant period + 1%).
The FCA has expressly commented that it is supportive of updated market practices on commission disclosure following the Court of Appeal judgment. So no row back from commission disclosure and consent is the clear implication.
The complaints pause is likely to be extended (the FCA is to consult on this being extended to align to scheme timetable).
The FCA is reiterating that consumers do not need to use law firms or CMC, and that the FCA will continue to act against CMC firms it regulates using misleading advertising.
We have updated our detailed summary of the judgment - fill in the form here to download it.
We are planning a special Helping Hands webinar on the morning of Monday 18 August. You can register here and will share further information across our platforms shortly.
To talk to us about this more and book an individual review and impact assessment session with a member of the team, please contact us on the following details:
Jo Davis - 07741 240114 / Jo.Davis@auxillias.com
Daksha Mistry - 07458 304068 / Daksha.Mistry@auxillias.com
Paul Godsmark - Paul.Godsmark@auxillias.com
Dan Richards - Daniel.Richards@auxillias.com
