UK FCA warns motor‑finance firms over £9bn redress scheme readiness

The Financial Conduct Authority (FCA) has written to more than 100 motor‑finance lenders in the UK, saying it is "very concerned" about their operational readiness to implement the industry‑wide redress programme worth up to £9 billion. The regulator noted that many firms' plans are not yet capable of delivering timely and accurate compensation, which the FCA estimates will average about £830 per eligible claimant.

The FCA will publish examples of good and poor practice in the coming weeks and has invited lenders to a round‑table discussion. Major city banks—including Lloyds, Santander and Barclays—are among those facing potential liability. Car manufacturers have also responded: Mercedes‑Benz has set aside £400 million, while Volkswagen has made no provision. Consumer campaign group Consumer Voice, represented by Courmacs Legal, is challenging the scheme, and the FCA has pledged to defend it robustly at the Upper Tribunal.

The redress scheme stems from a Supreme Court ruling that left open the possibility of compensation for consumers affected by "secret" commission arrangements. The FCA warned that firms must continue preparing for all scenarios, improving underdeveloped systems and oversight of third‑party processes.