The UK Financial Conduct Authority (FCA) has published consultation paper CP25/27 (alongside a press release and an accompanying statement) incorporating its proposed market-wide consumer redress scheme under section 404 of the Financial Services and Markets Act 2000. The consultation follows the UK Supreme Court ruling on 1 August. The consultation on the redress scheme proposals closes on 18 November. The FCA anticipates the final rules will be set out in early 2026 followed by a staged implementation.
The proposed scheme covers claims in relation to arrangements which involve discretionary commissions, commissions said to be too high, and where there are commercial ties between the lender and the dealer, in each case that were not adequately disclosed, so giving rise to "unfair relationships" under the Consumer Credit Act 1974. For further information on the proposed scheme, you may like to read our article "FCA consultation on motor finance redress scheme".
In addition to the redress scheme, the FCA is consulting on an extension to the deadline for motor finance firms to send final responses to motor finance complaints until 31 July 2026, allowing time for the scheme rules to be finalised and for firms to act upon them. This 2026 deadline is a further extension to the 4 December 2025 deadline the FCA previously introduced for relevant complaints. The extended 2026 deadline would not apply to complaints regarding leasing agreements. Comments on these proposals should be submitted by 4 November, with FCA confirmation expected by 4 December.
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