Although the FCA has not formally decided whether it will introduce a redress scheme in respect of motor finance commission arrangements, it has set out the key things it will need to consider if it were to do so.
It says it cannot predict the outcome of the Supreme Court judgment but wants to be able to react as quickly as possible once the judgment is out. If it decides a redress scheme is the way ahead, it will consult on its plans – but it may choose to have a short consultation window to minimise any further delays.
It would ground the scheme in fundamental principles, but appreciates there may be tensions between some of them, so it may need to strike a balance at times. The principles are:
- comprehensiveness
- fairness
- certainty
- simplicity and cost effectiveness
- timeliness
- transparency
- market integrity.
Among the issues the FCA would need to consider are:
- whether the scheme would be opt-in or opt-out from the customer standpoint: opt-out schemes are easier for customers but could be more expensive and take longer to implement;
- how firms should calculate redress: the FCA is aware that any scheme must be both fair to customers who have lost out and ensure the integrity of the motor finance market. It is also aware that firms failing or withdrawing from the market would harm competition and could make finance more expensive in future.
As it previously indicated, the FCA will confirm within 6 weeks of the Supreme Court judgment whether it is proposing to introduce a redress scheme and set out its proposed timings. For the moment, it welcomes views on the principles it should apply if setting up a scheme, and will say no more than that it would expect to require firms to implement any scheme in 2026.