Latest Reactions to the High Court Decision Announcement
The Financial Conduct Authority (FCA) has announced its intention to consult on a redress scheme focused on historic Discretionary Commission Arrangements (DCAs) following the Supreme Court ruling on motor finance commission arrangements. The consultation is set to launch by early October 2025, with the scheme expected to become operational in 2026.
The redress scheme, aimed at compensating motor finance customers who were treated unfairly, could cover loans dating back to 2007. If implemented, it could potentially cost the industry between £9 billion and £18 billion, with an average compensation of around £950 per agreement.
The FCA will consider multiple factors when determining unfairness, including the size and nature of commissions, disclosure practices, customer characteristics, and compliance with regulatory rules. The consultation will also explore the structure of the scheme, including the possibility of opt-in vs. opt-out models and eligibility thresholds for compensation.
Customers who have already submitted complaints remain under review, and lenders are preparing to follow FCA guidance once the consultation concludes. It is worth noting that customers retain the right to pursue court claims outside the redress scheme if they choose not to participate.
The FCA's enhanced Consumer Duty, which emphasises better transparency and outcomes in the market, will guide the development of the redress scheme. Courmacs Legal, however, states that the ruling does not address the position where a discretionary element was applied to the commission.
Industry experts, such as Consumer Intelligence, have called for a pragmatic and orderly process to be established by the FCA. Ian Hughes, CEO of Consumer Intelligence, believes the ruling provides clarity needed in the industry while ensuring accountability. Lenders and motor retailers are urged to engage constructively in the consultation process.
Darren Smith, Managing Director at Courmacs Legal, calls for all parties to allow the judicial process to be completed before seeking to interfere with redress. The ruling, delivered by the UK Supreme Court on 1 August 2025, favoured lenders and motor retailers, but some agreements may still be considered unfair under the Consumer Credit Act.
The FCA aims to balance delivering operational certainty for firms across the value chain while ensuring appropriate redress for affected consumers. The industry is urged to meet this challenge constructively and demonstrate an unwavering commitment to fairness.
[1] Financial Conduct Authority Press Release, "FCA to consult on redress scheme for motor finance customers," August 2025. [2] Courmacs Legal Press Release, "Courmacs Legal responds to FCA's redress scheme consultation," September 2025. [3] Consumer Intelligence Press Release, "Consumer Intelligence welcomes clarity on motor finance commissions," August 2025. [4] Birketts LLP Press Release, "Birketts LLP comments on FCA's redress scheme consultation," September 2025. [5] The Guardian, "FCA to compensate motor finance customers in wake of Supreme Court ruling," September 2025.
- The regulation of the redress scheme for historic Discretionary Commission Arrangements (DCAs) in the business of motor finance, as announced by the Financial Conduct Authority (FCA), will consider various factors, including the structure of the scheme and the nature of commissions, as part of its consultation, set to launch by early October 2025.
- The potential cost for the industry resulting from the redress scheme could range between £9 billion and £18 billion, according to industry experts, impacting the finance sector significantly once operational in 2026.
