Regulatory Updates

The FCA’s announcement on 30 March 2026 marks the start of a tight and complex implementation period for much of the motor finance sector. Firms now face an industry wide, regulator driven re-dress programme with fixed milestones, significant operational demands and heightened supervisory scrutiny. The window to prepare is narrow, expectations are high and the consequences of delay or non compliance will be material. With millions of agreements in scope and redress expected to run into the billions, firms must act decisively to meet the FCA’s timetable.

 

A Two Scheme Structure Designed to Avoid Delay

Following concerns raised during consultation about the FCA’s statutory powers over older agree-ments, the regulator has confirmed it will run two schemes in parallel:

• Scheme 1: Agreements from 6 April 2007 – 31 March 2014
• Scheme 2: Agreements from 1 April 2014 – 1 November 2024

This dual scheme approach ensures Scheme 2 proceeds without delay, even as Scheme 1 sits on ear-lier regulatory foundations. In total, 12.1 million agreements are expected to be eligible for com-pensation, reduced from 14.2 million after the FCA tightened eligibility criteria to focus only on con-sumers demonstrably treated unfairly.

 

Sharper Eligibility and Redress Parameters

The FCA has introduced several exclusions including small commissions, zero APR products and tied arrangements that were contractually in place but not enforced. It has also raised the threshold for a “high commission” arrangement to at least 39% of the total cost of credit and 10% of the loan amount.

Redress is expected to total around £7.5 billion, slightly lower than initial consultation estimates. Approximately 90,000 consumers whose cases closely mirror the Johnson Supreme Court judgment will receive full commission plus interest. Others will receive a hybrid remedy combining both esti-mated average loss and commission paid, with APR adjustments estimated at 17% for post 2014 agreements and 21% for earlier agreements.

 

Tight Timelines and High Supervisory Expectations

The FCA has set demanding implementation deadlines:

• 30 June 2026: Implementation period ends for agreements from 1 April 2014
• 31 August 2026: Implementation period ends for pre 2014 agreements Firms then have:
• 3 months to notify consumers who already complained whether redress is due; and
• 6 months to contact potentially eligible customers who did not complain.

A new dedicated supervisory team, led at the director level at the FCA, will oversee compliance, sup-ported by regular reporting requirements. Senior managers must formally attest to oversight and de-livery, and the FCA reserves the right to intervene using its enforcement powers.

To prevent fraud, firms must adopt unique reference numbers for all communications and provide a standardised factsheet at first contact.

 

How Kroll Can Help Firms Meet the Challenge

As firms mobilise rapidly to comply with the FCA’s expectations, Kroll can provide targeted, expert support across the full lifecycle of delivery:

• Project Assurance: Independent oversight of governance for firms and senior managers, resourcing assistance, MI quality, customer communications and treatment of vulnerable customers
• Data Resilience: Reconstruction of legacy datasets, forensic analytics, cohort segmentation, redress logic stress testing and board level assurance frameworks
• Technology Enabled Redress Administration: A secure, proven scalable platform to support all customer communication needs, including technology led identity checks, unique customer interface, automated workflows, compliant communication, end to end auditability and built in reporting.
• Redress Calculation: Specialist analysis of complex datasets to deliver accurate, efficient and transparent redress calculations or assurance of same.