Background
The motor finance redress scheme is currently partially suspended, but firms must comply with all rules which are not suspended.
Approximately 6 weeks after the motor finance redress scheme rules were published, the FCA asked in-scope firms to submit implementation plans. The regulator asked them to explain how they would deliver fair, consistent and timely outcomes for consumers. The FCA then reviewed each plan and provided feedback.
The FCA considered firms’ plans against key areas of scheme delivery, including:
- Operational readiness.
- Population identification.
- The approach to grouping of cases and group-based decision making.
- Redress calculation and payment.
- Quality assurance and oversight.
- Multiple representative issues.
Good and poor practice
The FCA sets out what it found and provides examples of good and poor practice in the above areas.
The regulator also reminds firms what they need to do in each area:
- Operational readiness – Firms should be able to show how their implementation plans will work in practice. This includes explaining the customer journey, operational workflow, decision points, controls, dependencies and escalation routes. Firms should pay particular attention to hand-offs and judgement points, as these are often where delivery risk arises. Firms should understand and explain what each third party will do in practical terms, how the activity will be overseen, and what contingency arrangements are in place if data, systems or services are unavailable, incomplete or delayed.
- Population identification – Firms should be able to explain how they identified the starting population, what systems and data sources they used, what filters or exclusions were applied, and how outputs were checked. Where firms rely on third parties, they should explain the role of those parties, the controls over information requested and received, and contingency plans for incomplete or late data. Firms should be able to show that their population identification is evidence-based, that assumptions have been tested, and that any limitations in historic data have been properly managed. This supports fair consumer outcomes, reduces the risk of avoidable rework, and helps firms deliver redress within expected timescales.
- The approach to grouping of cases and group-based decision making – Firms should ensure decision-making frameworks are clear and capable of being applied consistently. Firms should be clear on which parts of their scheme are automated, and which rely on human judgement. These decisions can directly affect whether consumers receive redress, so firms should be able to show how they will be made, recorded, quality assured and escalated where needed.
- Redress calculation and payment – Firms should ensure they can show how a liability decision flows through to redress calculation, communication and payment. They should explain how calculations will be checked, how manual activity will be controlled, and how payment risks such as fraud, incorrect payment or duplicate payment will be managed.
- Quality assurance and oversight – Firms should show how they will test the accuracy, consistency and fairness of decisions and outcomes. They should also set out how they will act to promptly address the root causes of issues.
- Multiple representative issues – Firms should identify cases involving multiple representatives promptly and manage them in a way that supports fair consumer outcomes. This should include following the steps set out in our Dear CEO letter of 4 February 2026. Where it is unclear who is acting for the customer, firms should work with the customer and the representatives to resolve the issue. Implementation plans should lay out how firms will meet these expectations. This includes through prompt and clear engagement and timely resolution of issues. Where legal risks arise, firms should consider taking their own legal advice.
Next steps
The FCA states that firms should consider the examples and make any necessary changes to their own plans, controls and oversight arrangements.
In particular, firms should test whether they can:
- Evidence how the relevant population has been identified.
- Explain the customer journey and operational workflow.
- Show how key decisions will be made, recorded and quality assured.
- Explain how redress will be calculated, checked and paid.
- Show that controls and quality assurance arrangements are ready for the risks in the process.
- Manage dependencies, exceptions, complex case types and contingency scenarios.
The FCA adds that where plans remain high level or key areas are still in development, firms should address those gaps. Firms should keep named Motor Finance Supervisors updated on material developments. This includes on areas such as calculators, third-party assurance, audit arrangements, customer communications and contingency planning.