FCA signals further change to proposed motor finance redress scheme
The wait for the FCA’s final rules continues, but there is finally a glimmer of light at the end of the tunnel. The regulator has now indicated that the final rules are expected in late March, offering some shortterm clarity and, no doubt, welcome relief for anyone hoping to make plans this weekend without refreshing the FCA website every five minutes.
Change is coming, and the FCA knows it
One of the more notable developments is the FCA’s acknowledgment that the final Scheme is likely to look different from what was originally proposed. This comes after an exceptionally high level of engagement with the consultation process, with more than 1,000 responses submitted.
That volume of feedback, coupled with significant industry concern, appears to have landed. It has clearly prompted the FCA to reconsider certain aspects of the Scheme’s design and implementation, which many firms will welcome after months of uncertainty.
A more realistic timetable?
Among the most significant anticipated changes is the introduction of a more structured and pragmatic implementation timetable. The FCA has suggested that firms may be given around three months to implement the Scheme, with an extended period of up to five months for older agreements.
This shift recognises the operational complexity involved and reflects a more realistic understanding of what firms need to do to build compliant systems and processes at scale. For many lenders, this will feel like a step in the right direction.
Pragmatism enters the process
There are also encouraging signs of a more practical approach to some of the Scheme’s operational requirements.
In particular, the FCA has indicated it may drop the requirement to write to customers by recorded delivery. This proposal was widely criticised as costly, impractical, and disproportionate. Removing this obligation would significantly reduce friction and unnecessary expense.
Another potential change is that customers who receive a redress offer may be able to accept it immediately, rather than having to wait for a final determination. This would streamline the customer journey and reduce administrative burden for firms, while also delivering quicker outcomes for consumers.
Still challenging for lenders
Despite these positive signals, the position for lenders remains far from straightforward. Detailed scenario planning, investment in operational resilience, and preparation for multiple possible outcomes are still very much required.
Firms continue to face a delicate balancing act. They must be ready to move quickly once the final rules land, while avoiding overcommitment to processes that may yet change.
Legal risks on the horizon
Concerns about the structure and legal basis of the proposed Scheme also remain unresolved. Unless these issues are addressed in the final rules, the prospect of judicial challenge remains a realistic possibility.
While the FCA has not commented directly on this risk, it would be prudent for firms to factor it into their planning, particularly where there may be an appetite to challenge the Scheme.
