FCA Motor Finance Redress Consultation: What’s Next?

The Financial Conduct Authority (FCA) has closed its consultation on the proposed motor finance redress scheme, marking a significant milestone in addressing concerns arising from historic motor finance practices. The consultation, which ended on 12 December 2025, attracted strong responses from key industry bodies.

Background: How did we get here?

The FCA’s proposals follow the Supreme Court’s landmark judgment on 1 August 2025 in the motor finance scandal. While the Court ruled that dealers do not owe consumers a fiduciary duty, it opened the door for claims that certain credit agreements may have been unfair under the Consumer Credit Act 1974.

In October, the FCA outlined plans for a redress scheme covering agreements between 6 April 2007 and 1 November 2024, aiming to compensate customers who may have been treated unfairly. The consultation deadline was extended to December this year to allow stakeholders more time to respond.

Industry response

Two leading trade bodies - the Finance & Leasing Association (FLA) and the National Franchised Dealers Association (NFDA) - have urged the FCA to scale back its proposals. Both argue the scheme should apply “only to those consumers who have actually suffered loss.”

The FLA warned that the current design would fail to deliver the fairness, simplicity and certainty the FCA intended. It proposed alternative methods for assessing lender liability and consumer loss, alongside practical steps for efficient implementation. One requirement - the obligation for lenders to trace consumers who are not owed redress - was criticised as “disproportionate and expensive.”

Echoing these concerns, the NFDA stressed the need for a “proportionate, evidence-based and operationally workable approach” and confirmed its commitment to constructive engagement as the scheme evolves.

What happens next?

With the consultation now complete, the FCA will review all responses and continue dialogue with stakeholders. Final rules are expected in February or March 2026, leaving lenders, dealers and consumers waiting for clarity.