Executive summary
The FCA’s March 2026 policy statement turns motor finance redress from a long-running conduct issue into a defined implementation programme. The regulator will move forward with two plans that cover agreements made between April 6, 2007, and March 31, 2014, and between April 1, 2014, and November 1, 2024. It thinks that 12.1 million agreements are eligible, that £7.5 billion will be paid in compensation, and that most cases will be settled by the end of 2027.
For firms, the significance is not just liability. It is execution. The scheme introduces:
- fixed implementation periods,
- outreach deadlines,
- reporting, senior manager accountability,
- fraud controls,
- standardised communications.
It also narrows some parts of scope through exceptions and exclusions, which makes early scoping and methodology decisions critical.
The key message for compliance teams is straightforward: firms now need to move from interpretation to operational readiness across governance, scope, data, complaints, communications, redress calculations, and regulatory reporting.
Issuing authority and document details
- Issuing body: Financial Conduct Authority
- Primary document: Policy Statement PS26/3, Motor Finance Consumer Redress Scheme
- Publication date: March 2026
- Status: Final policy statement and made rules
- Regulatory basis: Section 404 of the FSMA gives the consumer redress scheme powers, and sections 140A and 140B of the Consumer Credit Act 1974 say who is responsible for unfair relationships.
The policy statement sits alongside a broader evidence and implementation package, including:
Critical dates and deadlines
For agreements that start on or after April 1, 2014, the implementation period ends on June 30, 2026. For agreements that start before that date, it ends on August 31, 2026.
Companies have three months from the end of the relevant implementation period to let complainants know if they are owed compensation and how much. That means
- Scheme 2 complainants: by 30 September 2026
- Scheme 1 complainants: by 30 November 2026
Customers then have a month to accept or reject the offer:
- Scheme 2: by 31 October 2026
- Scheme 1: by 31 December 2026
Redress must then be paid within 1 month:
- Scheme 2: by November 2026
- Scheme 1: by January 2027
For non-complainants with at least one relevant arrangement, firms must invite them within 6 months of the end of the relevant implementation period:
- Scheme 2 invite deadline: 31 December 2026
- Scheme 1 invite deadline: 28 February 2027
People who choose to opt in have six months to do so, and companies have three months after that to decide if they owe them money. People who haven’t been contacted yet have until August 31, 2027, to file a complaint.
Lenders must also tell the FCA within 15 working days of the scheme’s start date if they plan to carry out scheme steps during the implementation period and name the senior manager in charge. They must send in one-time information and the scheme implementation plan within six weeks of the scheme’s start date.
Scope and applicability
- Who is in scope? All FCA-authorised firms that acted as lenders or brokers in regulated motor finance agreements.
- What kind of institutions it applies to? Banks, building societies, specialist lenders, and motor finance brokers who entered into agreements where discretionary commission arrangements (DCAs) were used or where disclosure requirements were breached.
- Territorial scope: United Kingdom (UK).
- Temporal Scope: Agreements entered between 6 April 2007 and 1 November 2024.
Key regulatory obligations & requirements
Mandatory Industry-Wide Redress Assessment
- What is required: Firms must proactively identify all customers treated unfairly under the defined criteria (primarily undisclosed DCAs) and calculate compensation. Firms cannot wait for individual complaints.
- Who must act: Compliance, Data Analytics, Legal, Finance.
- By when: Immediate upon 30/03/2026; ongoing until the scheme closure date (to be defined in final rules).
- Nature: Mandatory (Final Rule).
Data Extraction and Liability Modelling
- What is required: Firms must extract historical data for the 2007–2024 period to identify affected agreements. This includes reconstructing commission structures and assessing “fairness” based on the Supreme Court’s findings.
- Who must act: IT, Operations, Actuarial/Risk.
- By when: Immediate (Data extraction) and ongoing (Liability calculation).
- Nature:
Compensation Calculation and Payment
- What is required: Firms must pay redress to eligible consumers. The FCA has adjusted calculation methods to reflect greater losses for the period 2007–2014. In approximately 1 in 3 cases, compensation amounts will be adjusted upwards.
- Who must act: Finance, Customer Operations.
- By when: As soon as practicable after identification of the customer.
- Nature:
Complaint Handling Rule Changes (PS25/18)
- What is required: Adherence to new rules regarding the handling of motor finance complaints, ensuring that the redress scheme does not preclude individual complaints where specific circumstances warrant them.
- Who must act: Complaints Handling, Legal.
- By when: 03/12/2025 (Effective date of PS25/18).
- Nature:
Regulatory risk assessment
Overall risk level: High for in-scope firms
This is high not simply because of redress exposure, but because of the breadth of implementation risk.
The most material risk areas are:
- Governance risk
Weak senior ownership, poor board oversight, or inadequate attestation support will create immediate supervisory exposure. - Scoping risk
Firms must distinguish correctly between Scheme 1 and Scheme 2, relevant arrangements, exceptions, exclusions, and limitation outcomes. Poor methodology here will affect every downstream decision. - Data and evidence risk
Historic records may be incomplete, especially pre-2014. The FCA nonetheless expects firms to identify relevant records and obtain missing information from third parties where required. - Calculation and controls risk
The remedy design is complex, particularly where multiple agreements financed a single transaction, where caps apply, or where set-off is considered. - Communications and fraud risk
The FCA has made communications part of the control framework. It expects clear, secure, and fraud-aware outreach. Research published alongside the scheme shows that communication format materially affects comprehension, trust, and informed action, with Plain English variants outperforming more technical versions on key measures. - Supervisory scrutiny risks
The FCA is standing up a dedicated supervisory team and expects complete and accurate data on time.
Required actions and next steps
| # | Action | Owner | Due Date | Priority |
| 1 | Establish a dedicated “Motor Finance Redress Programme” steering committee. | CEO / Board | Immediate | HIGH |
| 2 | Initiate data extraction for all motor finance agreements from 06/04/2007 to 01/11/2024. | CIO / Head of Data | 30/04/2026 | HIGH |
| 3 | Engage external legal counsel to interpret “unfair treatment” criteria post-Supreme Court ruling. | General Counsel | 15/04/2026 | HIGH |
| 4 | Develop actuarial models to estimate redress liability (referencing FCA’s £8bn-£18bn range). | CFO / Chief Risk Officer | 30/05/2026 | HIGH |
| 5 | Update internal complaint handling procedures to align with PS25/18 and PS26/3. | Head of Conduct | 30/04/2026 | MEDIUM |
| 6 | Draft customer communication templates for redress notification. | Marketing / Comms | 30/05/2026 | MEDIUM |
Links to existing regulatory framework
- Supreme Court Ruling: Johnson v FirstRand Bank Ltd [01.08.25] – The legal basis for the scheme, confirming breaches of law regarding DCAs.
- PS25/18: Changes to handling rules for motor finance complaints (effective 03/12/2025).
- CP25/27: The consultation paper that preceded this policy statement.
- Consumer Duty: The scheme reinforces the principle of acting to deliver good outcomes for consumers, specifically regarding fair value and consumer understanding.
- FCA Handbook (CONC & COBS): Relates to rules on commissions, disclosure, and treating customers fairly (TCF).
Key FCA messages from the policy paper
These are short quotes worth preserving in the piece:
- “We will therefore go ahead with a scheme.”
- “We will implement 2 schemes.”
- “Firms will have up to: 30 June 2026 for loans taken out from 1 April 2014. 31 August 2026 for those agreed earlier.”
- “Firms will be required to consistently use a unique reference number in communications.”
- “Firms will also be required to provide a standardised factsheet on first contact with the consumer.”
- “We remain of the view that requiring each firm to appoint a designated Senior Manager with overall responsibility… is essential to ensuring robust oversight, effective governance and accountability.”
Analyst notes and caveats
The FCA has clearly tried to make the final scheme more operationally workable than the consultation version. It reduced non-redress cost estimates, removed the requirement to contact all historic customers, removed mandatory recorded delivery, and narrowed parts of scope through exceptions and exclusions. That makes the final package more feasible, but not necessarily simple.
The pre-2014 period remains the most sensitive area. The FCA maintains it has power to include this period but explicitly adopted a two-scheme structure to reduce the risk that legal challenge delays post-2014 redress.
The consumer survey adds useful context, but it is not definitive proof of what consumers understood in every case. The FCA itself presents it as evidence of consumer perception differences, especially around captive arrangements, not as a standalone legal test. The survey found that 68% of captive lender users noticed a connection between dealership and finance company, but 47% still assumed the dealership could offer finance from multiple companies.
The communications research is also indicative rather than determinative. It shows how consumers may react to scheme letters, but it does not eliminate the need for firm-specific testing, governance, and legal review. Still, it strongly supports the view that plain language, agreement-specific detail, and credible authenticity cues will matter in execution.
The redress framework itself remains complex. Firms need to distinguish between Johnson-like cases and the wider hybrid remedy population, apply different APR adjustments by scheme period, and operate caps without creating inconsistency or overcompensation. That is why methodology design and control evidence will be central to supervisory defensibility.
How This Implementation Can Be Delivered in a Structured, Controlled Way using FinregE’s Solutions
While the steps above define what needs to be done, the real challenge for firms is executing this FCA motor finance redress scheme implementation in a way that is consistent, scalable, and defensible under regulatory scrutiny.
In practice, this requires a connected approach across impact assessment, communication, obligation mapping, execution, and reporting — rather than managing each step in isolation.
Step 1: Capture & Structure the Regulatory Publication
The FCA policy statement and supporting publications must be systematically captured and interpreted consistently across the organisation.
FinregE’s Regulatory Summary Report provides a structured view of the regulation including executive summary, issuing authority details, critical dates & deadlines, scope & applicability, key obligations, and regulatory risk assessment — all in one place.
Key Capabilities
- Executive summary extraction
- Critical dates & deadline tracking
- Scope & applicability analysis
- Key obligations identification
- Regulatory risk assessment
Step 2: Conduct Structured Impact Assessment
Firms must document a consistent interpretation of the regulation, record business and operational impact, assign ownership, and maintain version history for auditability.
FinregE’s Impact Assessment Workflow allows teams to capture publication proposals, document business/operational impacts, assign assessors, and maintain full version history — ensuring consistent interpretation across the organisation.
Key Capabilities
- Assessment team assignment
- Publication proposal documentation
- Business impact analysis
- Operational impact tracking
- Version history & audit trail
Step 3: Translate Rules into Obligations, Risks & Controls
FCA rules must be broken down into specific obligations, associated risks of non-compliance, and required controls and actions — creating traceability from rules to operational activities.
FinregE’s Rule Details view with Regulatory Insights automatically generates obligations, risks, and controls from regulatory text. This creates a clear mapping: FCA rules → obligations → internal policies → operational actions.
Key Capabilities
- Obligation generation from rules
- Risk identification & assessment
- Control mapping
- Self-assessment initiation
- Source link traceability
Step 4: Convert Obligations into Managed Work Programme
Each obligation must be converted into a work item or task, with ownership assigned across functions, priorities set to regulatory deadlines, and progress tracked centrally.
FinregE’s Assessment Scheduler converts obligations into structured work items with categories, progress tracking, priority levels, start/due dates, and assigned owners — providing a single, controlled environment for programme management.
Key Capabilities
- Work item creation & categorisation
- Progress status tracking
- Priority level assignment
- Deadline management
- Owner assignment & accountability
Step 5: Maintain Real-Time Oversight & Gap Analysis
Firms need continuous visibility over progress, coverage of regulatory requirements, implementation status, and areas of partial coverage or non-compliance.
FinregE’s Impact Assessment Dashboard provides real-time metrics on rulebook coverage, obligation mapping status, gap analysis, and compliance coverage — enabling proactive control of the redress programme rather than reactive management.
Key Capabilities
- Rulebook coverage metrics
- Fully covered vs. partial vs. non-compliant tracking
- Gap identification & rationale
- Procedure mapping visibility
- Missing obligations & risks alerts
Final thought
The significance of PS26/3 is not just that the FCA is requiring redress. It is that firms are now expected to operationalise a large-scale consumer redress scheme under fixed deadlines, senior accountability, and close supervisory oversight.
That makes this much more than a conduct story.
It is an implementation story, a governance story, and a communications story all at once.
And the firms that respond best will be the ones that recognise that now.
Book a demo today to see how FinregE can help you.
