The Financial Conduct Authority (FCA) has issued a further update on its proposed motor finance redress scheme.

Published: 5 March 2026
Authors: Mahesh Vara

The wait for the final rules continues. However, the FCA has now indicated that the final rules are expected in late March, providing some short-term clarity and welcome relief for anyone with plans over this weekend!

Notably, the FCA has acknowledged that there are likely to be changes to any proposed Scheme. This follows an exceptionally high level of engagement with the consultation process, with more than 1,000 responses submitted. Such a volume of feedback, together with significant industry concern, has clearly prompted the FCA to reconsider certain aspects of the Scheme’s design and implementation.

Among the most significant anticipated changes is the introduction of a more structured implementation timetable. The FCA has indicated that firms may be given an implementation window of approximately three months, with an extended period of up to five months for older agreements. This adjustment appears aimed at recognising the operational complexity involved and providing firms with a more realistic timeframe in which to build compliant processes and systems.

Pragmatism enters the process

There are also signs of greater pragmatism in some of the proposed operational requirements. In particular, the FCA has suggested it may remove the obligation to write to customers by recorded delivery, a requirement that attracted criticism for being costly, impractical, and disproportionate. In addition, consumers who receive a redress offer may be permitted to accept it immediately, rather than being required to wait for a final determination. This change would streamline the customer journey and could reduce administrative burden for firms.

Despite these developments, the position for lenders remains challenging. The need for detailed scenario planning, investment in operational resilience, and preparation for multiple possible outcomes continues unabated. Firms must balance the demands of readiness against the risk of committing resources to processes that may yet be amended.

Legal risks on the horizon

Concerns about the structure and legal basis of the proposed scheme also continue to exist. As a result, absent those concerns being addressed in the final rules, the prospect of judicial challenge remains a realistic possibility. While the FCA has not addressed this explicitly, it would be prudent for firms to incorporate this possible eventuality into their preparations – particularly if they wish to challenge the Scheme.

We continue to work with our clients as they continue to prepare for any Scheme. Should you wish to discuss any aspect of the proposed redress scheme further, then please contact our team.