Month: August 2025

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FCA and House of Lords Financial Services Regulation Committee’s letters on a proposed motor finance redress scheme published

It’s always interesting to see the exchanges between the UK Financial Conduct Authority (the FCA) and the House of Lords Financial Services Regulation Committee (the Committee). They usually provide useful insights into the thinking of both the FCA and the Committee.

The letters which have been exchanged following the UK Supreme Court’s decision in Hopcraft & Hopcraft v Close Brothers Limited; Wrench v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance; Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2025] UKSC 33 are very interesting. Here are the links:

– FCA’s letter dated 4 August 2025; and

– Committee’s letter dated 8 August 2025.

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FCA publishes letter to claims management companies inviting them to review financial promotions relating to motor finance claims

On 4 August 2025, the UK Financial Conduct Authority (the FCA) published a copy of a letter dated 31 July 2025 that it sent to claims management companies (or CMCs) inviting them to review their financial promotions relating to motor finance claims.

This letter says that between 1 January 2024 and 30 June 2025, the FCA’s engagement with 14 CMCs result in 225 financial promotions being amended or withdrawn.

The FCA also identified a number of concerns including:

– exaggerated claim values;

– falsely implying that refunds have already been secured or are guaranteed;

– creating a false sense of urgency;

– indiscriminately suggesting the contact relates to knowledge of a consumer’s motor finance agreement; and

– signing up consumers without their consent.

CMCs have therefore been reminded to “avoid using clickbait-style promotions or language that suggests a guaranteed outcome before any investigation has taken place. Additionally, given the potential for a redress scheme to be introduced, firms should not use language that implies a false sense of urgency. Such messaging may place undue pressure on consumers and could be considered misleading under the FCA’s rules and the Consumer Duty“.

The FCA expects CMCs to ensure “that all financial promotions are clear, fair, and not misleading, and that they accurately reflect the nature and status of any potential claims”.

The FCA has asked firms to take the following action:

– review and revise financial promotions;

– avoid misleading outcome guarantees;

– remove false urgency; and

– monitor and update promotions regularly.

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FCA says it will consult on a proposed motor finance compensation scheme

Earlier today, on 3 August 2025, the UK Financial Conduct Authority published a press release and a statement setting out its plan to consult on a proposed motor finance compensation scheme.

The devil is always in the detail (particularly on a complicated topic like this) so we will need to wait to see what the FCA says (a consultation is likely to be published in October 2025 with a six week period for responses).

If a scheme is made then the FCA says it expects most compensation payments to be ‘no more than £950’ and for payments to be made ‘in 2026’.

But there are many points raised, and questions left unanswered, by the FCA’s announcement. And some parts of their announcement require a lot of work and buy in from Treasury.

The FCA has also published a transcript of a call with market analysts which took place at 5pm on 3 August 2025.

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UK Supreme Court hands down judgment in motor finance commission case

Earlier today, on 1 August 2025, the UK Supreme Court published a press release and its judgment in Hopcraft & Hopcraft v Close Brothers Limited; Wrench v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance; Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2025] UKSC 33 dealing with claims relating to commissions paid by lenders to dealers introducing customers entering into motor finance agreements.

The Court decided that:

– for both the claims under the tort of bribery, and in equity, there needed to be a fiduciary duty between the dealers and the customers;

– in typical relationships like these, the dealers did not owe the customers a fiduciary duty sufficient to give rise to a liability in the tort of bribery, or in equity;

– the claims in tort and equity in all three claims would be dismissed;

– in Johnson, where there was also a claim under the unfair relationship provisions in Sections 140A to 140C of the Consumer Credit Act 1974, the Court acknowledged that those provisions were “highly fact-sensitive“. There mere fact that there has been no disclosure, or only partial disclosure, does not necessarily mean a relationship was unfair;

– however, in Johnson there were three factors which the Court found to be relevant to support its conclusion that the relationship was unfair: (a) the size of the commission, (b) the fact that the dealer’s documents did not properly explain the dealer’s role and (c) it was questionable to what extent a customer could have been expected to read and understand the lending documents.