Tag: Commission

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FCA publishes motor finance consumer redress schemes

On 30 March 2026, at around 4:45pm, the UK Financial Conduct Authority (the FCA) published a press release, updated its webpage and published Policy Statement 26/3: Motor Finance Consumer Redress Scheme (PS26/3) (covering 584 pages).

But that was not all. The FCA also published (in addition to PS26/3):

– Technical Annex 1 (covering 181 pages);

– Technical Annex 2 (covering 45 pages);

– consumer research survey (covering 46 pages) and a technical report analysing the awareness of the relationship between vehicle dealerships and motor finance companies (covering 41 pages);

– an updated diagnostic report (covering 101 pages);

– motor finance redress scheme firm-led communications (covering 42 pages) and a supporting annex (covering 89 pages);

– two factsheets: one for customers invited to join the scheme and another for customers who have complained (each being 2 pages);

– analyst briefing slides (covering 25 slides); and

– a transcript of the analyst briefing call (covering 20 pages).

To try and avoid the need to read 1,178 pages, we’ve prepared a handy one-page summary of the key features of the consumer redress schemes (if you click the imagine you should get a bigger version). But the devil is, of course, always in the detail.

If you have any questions, please contact me, Jeanette, Leanna, or Paula, or any of your other usual Walker Morris contacts.

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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 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.

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FCA publishes a statement on key considerations for any consumer redress scheme for motor finance commissions

Earlier today, on 5 June 2025, the FCA published a statement entitled ‘Key considerations in implementing a possible motor finance consumer redress scheme’. 

The key points from the statement are:

– If the FCA proposes “an industry-wide consumer redress scheme“, it’ll set out rules on how to assess claims and calculate redress.  The aim of the scheme would be to make it “easy for consumers to understand and participate in, without needing to use a claims management company (CMC) or law firm“.

– The FCA has been “speaking with consumer groups, firms and industry trade bodies to get their views on important issues to consider if we do introduce a redress scheme“.  If the FCA decides to propose a redress scheme, it’ll consult on why and explain how it thinks a scheme could work. 

– Given the pre-consultation engagement, the FCA “may decide to have a shorter than normal consultation window (for example, 6 weeks)“.

– There will be seven key principles:

(1) comprehensiveness: the scheme should be as wide “as possible so consumers don’t have to go elsewhere, like court“;

(2) fairness: the approach (both on breach and redress) should be “fair to consumers and firms“;

(3) certainty: providing finality for both firms and consumers;

(4) simplicity and cost effectiveness: easy for consumers to participate and the cost of delivering the scheme should be proportionate for firms;

(5) timeliness: resolve the majority of claims “within a reasonable timeframe“;

(6) transparency: consumers should receive clear explanations of decisions and data on the progress of the scheme should be publicly available; and

(7) market integrity: support the ongoing, long-term availability of high quality, competitively-priced motor finance.

– The FCA acknowledges that there can be tensions between these principles and it will aim to get the balance right.

– Scope of a redress scheme: some features to consider are: (a) opt-in or opt out and (b) calculating redress must be “fair to consumers who’ve lost out” and “ensure the integrity of the motor finance market” (and the FCA acknowledges it has seen some “highly speculative figures by some CMCs and law firms“)

– The FCA continues to say that it’ll “confirm within 6 weeks of the Supreme Court judgment whether we’re proposing to introduce a redress scheme. If so, we’ll also set out timings for when we would issue a consultation“.

– If the FCA proposes to introduce a scheme, the final rules for any scheme would “be in 2026“.  The FCA is also keeping under review whether to make any changes to its Handbook.

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FCA issues statement on its next steps in its motor finance review

Earlier today, on 11 March 2025, the UK Financial Conduct Authority (the FCA) published a statement on its next steps in its motor finance review. The FCA says:

– If, taking into account the Supreme Court’s forthcoming decision on the appeal from the Court of Appeal’s decision in Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2024] EWCA Civ 1282, it concludes motor finance customers have “lost out from widespread failings by firms, then it’s likely we will consult on an industry-wide redress scheme“;

– Under a redress scheme, “firms would be responsible for determining whether customers have lost out due to the firm’s failings. If they have, firms would need to offer appropriate compensation. We would set rules firms must follow and put checks in place to make sure they do“;

– The FCA no longer plans to make a further announcement in May 2025. Instead, the FCA will confirm its position “within 6 weeks of the Supreme Court’s decision if we are proposing a redress scheme and if so, how we will take it forward“; and

– The FCA’s next steps on non-discretionary commission arrangements will also be informed by the Supreme Court’s decision.

There are some interesting points from this statement:

– The statutory test under Section 404 of the Financial Services and Markets Act 2000 refers to it appearing to the FCA “that there may have been widespread or regular failure by relevant firms to comply with requirements applicable to the carrying on by them of any activity“. The FCA’s statement that it may (depending on the circumstances) consult on such a scheme is therefore a simple re-statement of part of the test for a consumer redress scheme under the statutory provisions.

– It is unsurprising that the FCA will not make an announcement in May 2025: this seemed inevitable once the lenders were given permission to appeal by the Supreme Court in December 2024.

– There is no mention of the appeal to the Court of Appeal from the High Court’s decision in R (Clydesdale Financial Services Limited) v Financial Ombudsman Service [2024] EWHC 3237 (Admin). This has a ‘hear by’ date of 8 December 2025 and the Court’s consideration of the FCA’s rules and guidance in the Consumer Credit Sourcebook must (it is submitted) be part of the FCA’s wider consideration of whether there has been “widespread or regular failure“.

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FCA publishes policy statement banning motor finance discretionary commission models and making minor changes to commission disclosure rules

Earlier today, on 28 July 2020, the FCA published a policy statement, PS20/8, banning motor finance discretionary commission models and making minor changes to commission disclosure rules. The FCA also published a press release.

My one page summary is (and you can see a bigger version if you click on it):

If you want a pdf copy, please get in touch: russell.kelsall@TLTsolicitors.com.