Billions in compensation could be paid out under the FCA’s proposed motor finance redress scheme, covering agreements dating back to 2007. Martin Dodd, CEO of Huntswood, warns that firms face two immediate challenges — reconstructing historic customer data and protecting vulnerable borrowers — if they are to deliver a fair, transparent process.
The Supreme Court’s recent decision in Wrench v FirstRand Bank Ltd, alongside Johnson v FirstRand and Hopcraft v Close Brothers has reshaped the legal landscape for motor finance. While the Court ruled that car dealers do not owe a fiduciary duty to customers, it upheld the principle that certain commission arrangements — particularly those involving high, undisclosed payments — can render the lender-consumer relationship unfair under the Consumer Credit Act 1974.
In response, the Financial Conduct Authority (FCA) announced its intention to consult on a redress scheme that could see billions paid out to affected consumers. This process will move quickly with the six-week consultation commencing in October with the intention of redress payments commencing in early 2026. For motor lenders and dealers, this marks a critical juncture — not only in terms of compliance, but in how firms manage legacy data and support vulnerable customers through the claims process.
One of the most pressing operational challenges is data retrieval. The proposed redress scheme may cover agreements dating back to 2007, well beyond standard retention periods. Many firms will need to locate and interpret documentation that was never digitised, stored across disparate systems or held by third-party dealer networks. This includes structured data such as loan terms and commission logs, but also unstructured records like scanned contracts, emails and handwritten notes.
The ability to reconstruct a clear picture of what was disclosed to the customer — and when — is essential to determining eligibility and calculating redress. Firms must prepare to deploy a combination of forensic data tools to establish as clear a picture as possible of the experience of individual customers at point of sale. The goal is not just to retrieve data, but to do so in a way that is auditable, consistent and defensible under regulatory scrutiny.
As we engaged with the various stakeholders — right from lenders to motor dealers, trade bodies and regulators — one of the key challenges noted was the ability to locate and consolidate data — structured and unstructured. This has led us to collaborate with these stakeholders to create an industry-wide data-gathering tool that addresses the challenge by identifying the issue, intelligently identifying and segmenting customers, designing remediation and then properly closing each case.
Equally important is the need to identify and support vulnerable customers. Many of those affected by historic commission arrangements may be financially unsophisticated, digitally excluded, or experiencing hardship. Our own research indicates that 51% of customers were vulnerable at some point in 2025.
The Supreme Court’s judgment in Johnson highlighted how vulnerability can amplify the unfairness of a transaction, particularly when high commissions are not adequately disclosed. As firms prepare for the redress scheme, they must embed vulnerability considerations into every stage of the process — from customer outreach and claims handling to redress calculation and communication. This means training frontline staff to recognise signs of vulnerability, offering alternative channels for engagement (such as phone or in-person support), and ensuring that communications are clear, empathetic and jargon-free. It also means putting in place governance structures that allow for case-by-case discretion, especially where data gaps or customer circumstances require a more nuanced approach.
Recognising the challenges posed in treating vulnerable customers fairly, one of the approaches we have seen work internally is setting up new systems to manage this. For example, introducing mandatory ‘how to identify and manage vulnerability’ measures has delivered promising results, not just across our complaints & remediation and redress teams, but more broadly in our customer operations teams. This is something we would encourage firms to consider if they are not doing so already.
Ultimately, the redress scheme presents an opportunity for the motor finance industry to demonstrate accountability and rebuild trust. But doing so will require more than technical compliance — it demands a commitment to fairness, transparency, and customer care. Firms that invest early in data readiness and vulnerability support will not only mitigate risk but position themselves as leaders in responsible finance. A properly-run redress scheme also reduced the risk that customers will turn to claims management companies, who can take up to 30% of their claim in fees.
Our experience is that motor finance firms have done exceptional work in preparing for this, and want to do the right thing to help affected customers. As the FCA prepares to publish its consultation in October, now is the time for lenders and dealers to take stock of their data estates, review their customer engagement strategies and ensure they are ready to meet both the letter and the spirit of the regulator’s expectations.
Huntswood is a UK-based consulting and customer solutions firm, a ResultsCX Company.
“Countdown to FCA’s motor finance redress has begun” was originally created and published by Motor Finance Online, a GlobalData owned brand.
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