The 35% / 10% “tipping point” – still only a proposal

In the FCA’s consultation on the motor finance consumer redress scheme (CP25/27), the regulator proposes that a “high commission arrangement” for scheme purposes is where commission is:

• ≥ 35% of the total cost of credit and
• ≥ 10% of the loan amount.

The FCA has also been very clear that:

• It is consulting on the scheme – including the definition of “high commission” (we believe the threshold should be reduced to 20%); and
• The consultation is open until 12th December 2025; and
• It will decide by February or March 2026 whether to go ahead and, if so, on what final terms.

In other words, at the time these FOS decisions were issued:

• The scheme has not yet been confirmed under s.404 FSMA;
• The 35% / 10% thresholds are draft only; and
• Stakeholders are being invited to challenge the FCA’s analysis and suggest alternatives.

On paper, that is a live, meaningful consultation.

What FOS is doing with those draft thresholds

Despite that, we are already seeing FOS investigators issuing decisions that:

• Lift the FCA’s proposed 35% / 10% “high commission” benchmarks straight out of the consultation;
• Treat them as the decisive test for whether commission is “high” or capable of creating an unfair relationship; and
• Use the fact that a particular commission rate falls below those draft scheme thresholds as the key (and only) reason to reject complaints.

In effect:

“Your commission was only X% of the cost of credit and Y% of the loan. Under the proposed FCA scheme, that wouldn’t be ‘high commission’, so we’re not persuaded your relationship was unfair.”

That is not “context”. That is a presumptive application of a draft policy that has not yet been finalised, and it has the potential to cause significant consumer harm if replicated to complaints brought to FOS directly by consumers.

Given FOS is rejecting cases based upon the presumption of what the FCA Redress Scheme (if implemented) will set its qualifying criteria at, it would be reasonable to conclude that we should be receiving upholds too, but that isn’t the case as FOS continues to rely upon the FCA pause still being in place.

This is a clear ‘one rule for one and one for another’ and yet another example of lender over consumer.

Why this makes the consultation look like a box-ticking exercise

If the FCA says, “We’re genuinely open to feedback on this scheme, including the 35% / 10% tipping point,” but the Ombudsman – right now, before the scheme even exists – is already using those numbers as a de facto and directly referred to cut-off for complaints, what does that tell consumers and their representatives?

It suggests:

1. The outcome is a foregone conclusion. If FOS is already behaving as though the scheme and its thresholds are fait accompli, then whatever the FCA says about “listening to feedback” looks performative at best.
2. The consultation risks being reduced to PR stunt. Publicly: “We welcome views; nothing is set in stone”. In practice: “Our associated dispute-resolution body is already using the draft numbers to knock out cases”.
3. Consumers are being trapped between two moving goalposts. On one side, lenders can point to the consultation and say: “This is just a proposal, don’t assume you’ll get redress”. On the other, FOS can say: “We’re using those proposal thresholds to tell you your commission wasn’t ‘high enough’ to reject your claim now”.

That is the very definition of regulatory mixed messages and it undermines confidence in both the consultation and the Ombudsman process.

What FOS should be doing (but isn’t)

Right now, no scheme is in force. The FCA suggests it is still consulting.

Until a scheme actually exists under s.404 FSMA, FOS should be keeping complaints on pause until such time as the final rules are set by the FCA.

Once, and only once a scheme is in place and a complaint falls outside of the scope of the scheme should FOS be informing complainants that their cases do not qualify for compensation.

We are not there yet.

So when FOS lifts the draft scheme tipping point and uses it as though it were a binding threshold for unfairness today, it is jumping ahead of the law and, in practice, pre-empting the consultation.

Why this matters in the real world

This is not an academic spat about methodology. The consequences are very real:

• Consumers with undisclosed commission below the draft 35% / 10% cut-offs are being told now that their complaints won’t be upheld.
• Those decisions are being issued during a period when the FCA is telling the market that the scheme design, including those cut-offs, is still up for debate.
• If the thresholds move, or if stakeholders successfully challenge the FCA’s analysis, those consumers may have lost their chance at fair redress because FOS pre-judged their cases against numbers that were never final.

This is exactly the outcome a genuine consultation is supposed to avoid.

Where does this leave consumers and their representatives?

Right now, it looks like this:

• The FCA is selling the scheme as a carefully-balanced solution and inviting detailed feedback on the tipping points.
• The FOS is already road-testing those tipping points in live complaints, not to help consumers, but to close cases.

If that isn’t at least indicative of a box-ticking exercise, it’s hard to imagine what is.

At a minimum, there needs to be:

1. Immediate clarity from both the FCA and FOS on the status of the 35% / 10% thresholds in current Ombudsman work;
2. A halt to any Ombudsman reliance on draft scheme metrics as a decisive test while the consultation is open; and
3. A public explanation of how FOS will protect consumers whose complaints were rejected on the back of draft scheme criteria that may yet change.

Until then, the message from the decisions we’ve seen is stark: while the FCA talks about “listening”, the system looks very much like it’s already acting as if the consultation is done.

And that should worry everyone, and we must consider a comment in a recent FCA consultation call where a representative asked if there is a “snowball’s chance in hell” of the FCA considering the serious concerns that lenders are being put ahead of consumers when implementing the redress scheme rules.