How the FCA Turned Motor Finance Redress Into Damage Limitation

There’s a moment in most national scandals when you start to realise the system isn’t trying to fix the problem, it’s trying to manage the fallout. In the UK’s motor finance commission scandal, that is happening now.

The Financial Conduct Authority (FCA) has publicly acknowledged that “many firms broke its rules” and didn’t properly tell customers about commission arrangements, subsequently deemed unlawful by the Supreme Court. Yet what’s emerging is not a full-throttled attempt to put consumers back where they would have been without the unlawful misconduct. What’s emerging is a damage-limitation exercise dressed up as a redress scheme.

And it is no coincidence that this is happening since 2023, when Parliament handed the FCA a responsiblity to boost competitiveness and growth.

But when you hand a consumer protection regulator a “growth” mandate, you are handing responsibility to people who have no experience or expertise in how to boost any economy.

More concerning, you create an immediate conflict of interest.

The uncomfortable truth about the FCA’s “growth” mandate

To be fair, it is impossible for the FCA to keep all sides happy.

However, what has happened is that lobbying from the banking sector has rocketed, seeking to take advantage of an organisation that has been handed an impossible task of boosting growth with little know-how.

The FCA has listened to and been led by the banking sector as an industry that purports to know how to boost growth and competition (financial crash anyone?).

The result is a regulator that puts the wishes of those it regulates above those it is responsible for protecting.

If you want to know whether that tension is real, look at the motor finance redress proposal and ask a basic question:

Does it feel like an uncompromising consumer protection response, or a calibrated settlement designed to avoid spooking the lenders?

Motor finance – from “you paid too much” to “be grateful you get anything”

The FCA’s own historical work (prior to 2023) on motor finance didn’t mince words about consumer harm.

When it eventually moved to ban discretionary commission arrangements (DCAs) — arrangements that incentivised brokers to hike interest rates to earn more commission — it highlighted the scale of detriment. In its impact assessment, the FCA estimated that on a typical £10,000 motor finance agreement, higher dealership commission under one form of DCA can result in the customer paying around £1,100 more in interest charges over a four-year term.

That was the regulator’s own maths.

Fast-forward to today (post 2023!), and the FCA’s ‘proposed’ compensation scheme now talks in terms of an average payout of £700 per agreement, and that figure includes compensatory interest.

Read that again.

• FCA’s own prior analysis: £1,100 extra interest paid by consumers on a typical deal (in at least one DCA model), not including compensatory interest.
• FCA’s current scheme comms: £700 average compensation including compensatory interest.

That’s not a mathematical error, that’s a policy choice.

And it’s not happening in a vacuum. The FCA’s redress proposals openly admit that because the scheme must be workable at scale, “not everyone will get everything they would like from a scheme”. Conveniently, the people least likely to “get everything they would like” are the people who were overcharged.

Coincidence? Let that sink in.

Interest is where the real haircut happens

You can tell how serious a redress scheme is by how it treats time, because time is money.

Historically, the Financial Ombudsman Service (FOS) applied a standard 8% simple interest rate on compensation awards. It was part of ensuring consumers weren’t left worse off simply because companies unfairly held their money for years, and it acted as a small deterrent against mis-selling.

Now look at where we are:

1) The FCA’s proposed scheme interest rate is “Bank of England base rate + 1%”.

The FCA’s own consumer information says that under its current proposals, compensation would include interest calculated as the average base rate per year, plus 1%, from the date of overpayment to the date compensation is paid.

By way of reference, the Supreme Court ordered “interest at a commercial rate”, widely accepted in that particular case to be circa 7%.

2) The FOS changed its own interest approach from 1st January 2026.

The FOS has published a policy statement confirming it has also moved away from the historic 8% standard and instead applies a time-weighted average of Bank of England base rate + 1 percentage point for “pre-determination” interest.

So the FCA designs a redress scheme with base+1 interest… and the ombudsman shifts to base+1 interest.

If you don’t see the pattern, you’re not looking hard enough.

This isn’t neutral modernisation. It is a system-wide recalibration downward, exactly in the direction that reduces liability for firms and reduces recovery for consumers.

Adding friction, the introduction of fees for representatives

If you want fewer complaints, not by solving misconduct but by reducing the number of people able to pursue it, you don’t need to ban complaints. You just need to make complaining more difficult.

That’s exactly what has happened with professional representation at the FOS.

From 1st April 2025, case fees are charged where a complaint is referred by a professional representative and exceeds the annual free-case allowance.

The Financial Times reported that after the fee was introduced, complaints volumes fell, largely because fewer cases were being submitted by professional representatives, and noted concerns from consumer advocates that the fees may limit access.

This is the crucial point, fees change behaviour. They always do. And when behaviour changes, the people who suffer are the least confident, least resourced, and most vulnerable, the ones least able to navigate firms, deadlines, evidence requests, and legal threats on their own.

And it’s especially concerning because the “common sense” alternative was staring everyone in the face:

If you want to deter weak cases charge the losing party. Yes, it is that simple.

Abby Thomas, the FOS leadership crisis, and what it says about the “ecosystem”

The Financial Ombudsman Service isn’t operating in calm waters, it rarely does. It’s been in leadership turmoil and Parliament has been forced to drag information out of it.

Abby Thomas’s departure as FOS Chief Executive/Chief Ombudsman was announced on 6th February 2025. The House of Commons Treasury Committee later concluded, based on documents it reviewed that the FOS board dismissed her after “fundamental disagreements” and a “collapse in confidence”. MPs also criticised the chair’s conduct during scrutiny and stressed the need for proper accountability.

You don’t have to invent conspiracies to see what this suggests.

Common sense lost out to implementing a deterrent to complaints, and anybody that stood in the way was maneuvered.

PPI proved redress is restorative and economically meaningful

The FCA and the general public have constantly been fed the line that strong (fair) redress harms the economy. That paying consumers back is a “drag”, and would reduce competition and access to borrowing.

Yet the FCA’s own data shows that banks paid £38.3 billion in PPI refunds and compensation (a sum widely described as the largest UK consumer redress exercise).

Did the country collapse because households got money back they should never have been charged in the first place?

No. People used it to clear debts, stabilise their finances, pay for essentials and, yes, spend.

In an era where cost-of-living pressures have battered households’ incomes and security, returning money to people who were unfairly charged isn’t just “compensation”. It’s repair.

And repair is not anti-growth. It’s pro-household resilience.

The backfire is predictable, watered-down redress fuels litigation

Here’s the part the FCA and FOS seem determined not to learn from history… when people believe the “official” route won’t deliver fair outcomes, they don’t politely accept it. They reject it and seek alternatives.

The FCA has suggested it wants an orderly scheme, but the proposed scheme is now so heavily weighted against justice that it will end up creating the opposite.

The scheme will be ignored, and the courts will be deluged with claims as the only reliable route to fair redress.

What this should have been

A regulator that truly believed in consumer protection (and wasn’t conflicted) would do three things, unapologetically:

1. Pay back the full economic harm, not a “reasonable simplification” that happens to land below earlier estimates of detriment.
2. Use an interest approach that reflects real deprivation and deterrence, not a conveniently low benchmark that aligns with a pro-industry “orderly” outcome.
3. Design the complaints ecosystem around access, not around friction, and apply a “loser pays” principle rather than taxing representation.

Instead, we’ve been sold a story that growth requires quiet compromises; that fairness is negotiable; that victims should accept a reduced payout and move on.

Shame isn’t too strong a word

The government chose to add “growth” into the FCA’s mandate. The FCA chose to interpret “orderly” redress in a way that repeatedly softens the outcome for firms. Both the FCA and FOS have shifted interest in a direction that will reduce what consumers receive, while also introducing fees that change who can bring cases and how.

All of this may be presented as modernisation. But to millions of people who paid more than they should have, and who were not properly told why, it looks like a system protecting itself and seeking the approval of government for the responsibility handed to it.

Shame on the government for creating the conflict. And shame on the FCA and FOS for exploiting it, or worse, for pretending it isn’t there.



The FCA Radio Ad That Tells Consumers to “Wait” (While the Clock Keeps Ticking)

There’s a new Financial Conduct Authority (FCA) financed radio advert doing the rounds telling consumers three things:

• Wait
• Don’t use a representative
• If you want “100% of the facts”, go to the FCA

If you’re the sort of person who enjoys irony, you’ll love this advert. If you’re a consumer with a potential motor finance claim, you should be deeply concerned.

Because in my view, those lines are misleading by implication, misleading by omission, and perfectly designed to cause consumer harm, all while wearing a high-vis jacket labelled “We’re helping!”.

And yes, this is exactly the kind of advert somebody might reasonably consider reporting to the Advertising Standards Authority (ASA)!

1) “Wait” for what, exactly?

The FCA’s own consumer page states plainly that there is no compensation scheme in place yet, unless of course the consultation period is merely a box ticking exercise (let’s not go there).

So “wait” is not guidance. It’s based upon an idea, an ongoing discussion that may not see the light of day.

Worse, the FCA has regularly told consumers the opposite of “wait” in black and white. It has actively encouraged consumers to “complain now”, and under its current proposals those who complain before any scheme starts are likely to be dealt with sooner.

So if an advert is nudging people to sit on their hands, it’s pushing them away from the very action the regulator says could get them assessed sooner.

And while the FCA has paused and extended complaint handling timelines, that doesn’t magically stop time existing for other routes that are available to consumers (including court timetables and limitation arguments). The FCA itself has confirmed the pause lifts on 31st May 2026, and it will announce whether it will go ahead with a scheme by the end of March 2026.

What is becoming clear, is that the Redress Scheme is in serious danger of becoming an unforgettable white elephant, with representatives guiding consumers to fairer redress via the courts… and the FCA seems to be doing all it can to stop that from happening at any cost.

2) “Don’t use a representative” is not consumer protection. It’s crowd control

Let’s be clear… there are good representatives and there are bad representative. Consumers should be careful.

But a blanket “don’t use a representative” message is, in my opinion, reckless, because it implies representation is unnecessary in all cases, and it fails to explain the trade-offs.

Even the FCA’s own page takes a more nuanced position. It says you won’t need a CMC or law firm for any scheme and warns about fees, but it also recognises people do use them and explains what happens if you cancel.

The advert chooses a blunt instruction instead of providing balance, and the benefits of using representation.

Consumers choose representation for multiple reasons, not least because of one mis-selling scandal after another, lenders failing to handle valid complaints fairly, and a seemingly weak regulator that is uncomfortably close to those it pertains to regulate, which has resulted in a complete lack of trust.

If you’re going to broadcast an instruction that could materially affect how consumers pursue redress, you’re already wandering into BCAP territory: don’t materially mislead (3.1), don’t omit material information (3.2), and hold evidence for objective claims (3.9).
(BCAP Code: Section 3)

3) “100% of the facts are on the FCA website” is a huge claim, and it needs substantiating

That “100% of the facts” line is doing a lot of heavy lifting.

Yes, the FCA’s consumer page is helpful in parts.

But here’s the issue, the FCA is trying to steer behaviour.

It promotes a lender-run scheme as “simpler”, warns consumers they could end up with less “after legal fees”, and builds an entire comms approach around keeping consumers inside the scheme perimeter

Quite possibly because the scheme, in its current design, is heavily weighted in favour of lenders and allows the FCA some embarrassment for being asleep at the wheel in the first instance.

And then there’s the compensation point, which is absolutely central:

• The FCA’s proposal is that simple interest would be paid based on the annual average Bank of England base rate + 1%.
  (FCA Consultation Paper CP25/27 (PDF))
• But the Supreme Court’s decision in Johnson (part of the conjoined appeals) involved repayment of commission with interest at an “appropriate commercial rate”.
  (UK Supreme Court: Press Summary (UKSC 2024/0157))
• Bank of England base rate + 1% cannot be considered as an appropriate commercial rate.
• The proposal does not put many consumers back into the position of being refunded every penny that they were overcharged as a result of unlawful commission arrangements.
• The proposal makes assumptions on what would be considered to be unfair levels of commission at court, without any legal precedent to rely upon.

So if an advert tells consumers “100% of the facts are on the FCA website”, while the FCA’s own messaging frames the scheme as the obvious route and doesn’t exactly shout from the rooftops that courts can approach interest and valid claim criteria differently, that “100%” claim starts to look less like information and more like… marketing.

And marketing, on the radio, is exactly what BCAP regulates.

4) The scheme is lender-run, and the advert glosses over the obvious conflict

Under the FCA’s current proposal, lenders should contact consumers:

• within 3 months if the consumer has already complained
• within 6 months if they haven’t

The FCA acknowledges the practical problem if a lender doesn’t have your details, you may not be contacted and so you’d have a year from when the scheme starts to make a claim.

That’s not a minor footnote. That’s the whole ballgame for millions of people who financed a vehicle years ago, moved twice, and can’t even find the original paperwork without a séance.

Yet the advert’s “wait” message effectively encourages consumers to rely on the same institutions that benefited from the unlawful commission structures to (a) find them, (b) assess them, and (c) pay them.

If that doesn’t deserve a raised eyebrow, I don’t know what does.

Why this is ASA-complaint territory

If someone wanted to complain to the ASA, the argument (in plain English) is:

• The advert creates a misleading overall impression that waiting is safe and sensible. (BCAP 3.1)
• It omits material information, like the fact there’s no scheme in place yet, that complaining now may be beneficial, and that there are legitimate routes outside any scheme (including court). (BCAP 3.2)
• “100% of the facts” is an objective-sounding claim that must be capable of substantiation. (BCAP 3.9)
• Broadcast ads must be prepared with a sense of responsibility to the audience and to society. (BCAP 1.2)

References:

• BCAP Code: Section 3 (Misleading advertising)
• BCAP Code: Section 1 (General)
• BCAP Code (main page)

And Ofcom is clear, radio advert content complaints go to the ASA (except political advertising)

Final thought

This advert doesn’t feel like consumer guidance. It feels like a behavioural nudge to stay calm, don’t get help, and only read what we put in front of you.

If that’s genuinely the intention, it’s grotesque. If it’s not the intention, it’s still dangerous—because consumer harm doesn’t wait politely just because a radio voice told it to.

And neither does the clock.



The PCP Cold Call That Lasted Exactly Until I Mentioned TPS

Today (Tuesday 17th February 2026) I received an unsolicited call from a firm trying to sign me up for a PCP claim.

The caller faces a number of problems:

1. My mobile number is registered with the Telephone Preference Service (TPS) – the UK’s official “do not call” register for unsolicited sales and marketing calls.
   (tpsonline.org.uk)
2. The caller used a name that only exists to catch spam callers, a “canary” name I provide when I want to see exactly who’s selling my details.
3. I’ve been here before, and as a business owner that operates in the claims sector I know that this scourge puts all of us in a bad light and I do what I can to stop it.

I recorded the call, and I’ll be sending the evidence to the ICO (who enforces the rules on nuisance marketing calls) and the FCA (because anyone pushing “claims” activity like this should be prepared for regulatory scrutiny).
(ICO – PECR guidance)

And the most telling detail?

The moment I said “TPS”, the caller hung up. No debate. No confusion. No “we thought we had consent”. Just… gone.

The TPS Exists for Exactly This

Let’s be crystal clear, TPS isn’t a polite suggestion. It’s the mechanism people use to opt out of unsolicited live marketing calls.

Organisations making live marketing calls are expected to screen numbers against TPS and maintain “do not call” lists.

So when a caller dials a TPS-registered number to sell a claims service, this isn’t a “mistake”. It’s usually one of two things:

• incompetence, or
• a desperate business model that relies on breaking the rules until someone stops them

Given the speed of the hang-up, I’m not betting on incompetence.

This Isn’t Just Annoying, it’s Poisonous

These outfits aren’t just irritating consumers. They’re actively damaging genuine, compliant firms.

We saw this during PPI. A legitimate issue became a gold rush, and the public got battered by waves of nuisance calls, dodgy lead generation, and “we can get you thousands” nonsense.

Now it’s happening again, but with motor finance/PCP claims as the new bait.

And here’s the kicker, claims cold calling has already been targeted by government and a ban was introduced in relation to claims services (except where the person has consented).

So why are these calls still happening?

Because rogue operators know the economics:

• make enough calls,
• hook enough people,
• and treat the occasional complaint as “cost of doing business”.

Regulators Have Teeth, Let’s Make Them Use Them

If anyone thinks the ICO doesn’t act, think again.

The ICO has fined firms for unlawful marketing calls to TPS-registered numbers, including a £90,000 fine against a compensation-related company that made 95,000+ unsolicited marketing calls without evidence of consent.
(ICO – enforcement example)

So yes, this behaviour is absolutely on the regulator’s radar.

What’s missing is volume. Complaints. Evidence.

Which is why I recorded the call.

Why I Record These Calls

Because nuisance callers thrive in the fog.

They rely on:

• consumers not knowing the rules,
• consumers not having proof, and
• regulators receiving “he said / she said” summaries instead of clean evidence.

A recording cuts through all of that.

If you’re going to report a call, evidence matters.

Common-sense note: be careful about sharing recordings publicly, but providing evidence to regulators as part of a complaint is very different from uploading it for entertainment.

What Needs to Happen Next

This stops when it becomes unprofitable.

So here’s what I’m calling for:

1. The FCA and ICO must treat PCP/claims cold calling as a priority – Not a side quest. Not a “we’ll add it to the pile.” A priority.
2. Meaningful penalties, and faster – Fines exist. Use them. Publicise them. Repeat offenders shouldn’t get endless chances.
3. Clamp down on lead generation supply chains – These firms don’t just call, they buy, sell, recycle and repackage your data. That ecosystem needs disrupting.
4. Better protection for compliant firms – The good operators get tarred with the same brush. That’s unfair, and it drives consumers away from legitimate help.

These are not difficult to implement, and would be welcomed by all who operate in the correct manner.

If This Happens to You

• Register with TPS (if you haven’t already):
• If you’re TPS-registered and still get marketing calls, report them to the ICO:
• Note the number, time, what was said, and try to get the caller to confirm:
  • who they are,
  • where they got your data,
  • and what “consent” they think they have.

Most of the time, they magically develop a sudden interest in ending the call.

Final Thought: “We’ll Help With Your PCP Claim” Is the New “Have You Had an Accident?”

Unsolicited claims calls aren’t a harmless nuisance. They’re a pipeline for misinformation, pressure selling, data misuse, and they corrode trust in an entire sector.

It happened with PPI. It’s happening again.

It only stops when regulators are flooded with evidence and forced to act.

So to the mystery caller who hung up the moment I mentioned TPS:

Thanks for confirming everything I needed to know about where you were calling from.



The Real Reason Lenders Are Kicking Off About the FCA’s Motor Finance Redress Scheme

Lenders and their trade bodies are currently doing what lenders do best when compensation is due… clutching pearls, warning of “market disruption”, and hinting darkly that the sky will fall on the UK car market if the FCA presses ahead with its proposed motor finance consumer redress scheme.

We’re told the fuss is about “legal uncertainty”, “operational complexity”, and “the wider economy”. And yes, the proposed scheme is complex (as much as the FCA suggests otherwise). It spans motor finance agreements taken out from 6th April 2007, and it asks lenders to identify affected customers, assess “unfair relationships”, and calculate redress at an industrial scale.

But here’s the point most consumers should keep front-of-mind… even as drafted, the scheme is already unfair to consumers. And yet lenders are still pushing back hard. That tells you something.

First: the scheme already short-changes consumers

The FCA’s consultation (CP25/27) proposes several methods for calculating compensation, including a “commission repayment remedy”, an “APR adjustment remedy”, and (for most cases) a “hybrid” that averages the two.

In plain English, instead of automatically putting consumers back in the position they would have been in without discretionary commission pushing up the interest rate, the scheme heads for a ‘simplified’ middle-ground. That might be tidy for spreadsheets but it’s not the same as a full refund of the overpaid interest that flowed from commission-driven unlawful rate inflation.

Then there’s compensatory interest. The FCA’s proposed approach broadly links interest to the Bank of England base rate plus 1% (a weighted average around 2.09%).

Almost all critics have called that “insulting”, and not without reason. Consumer groups and claims firms have argued this approach will strip billions from overall compensation compared with using a more genuinely “commercial” rate (often discussed around 7–8% in this context). Perhaps more concerning is that this paves the way for another mis-selling scandal as the deterrent of fair compensation is removed.

So yes, the scheme as it stands is already skewed away from full consumer recovery. Which raises the obvious question…

Why are lenders still panicking?

If the scheme is already weighted in favour of lenders, with profits still retained despite the unlawful way they were obtained, why the noise?

Because even in its current consumer-unfriendly form, it may still cost lenders more than the FCA’s headline estimate and the reason may be brutally simple:

Lenders underplayed the level of consumer harm when feeding data and assumptions into the regulator’s modelling.

The FCA’s scheme costings have been widely reported around £11bn total (including implementation and administration costs), with an average redress figure around £700 per agreement and around 14.2 million agreements potentially deemed unfair.

But the regulator’s estimate is still a model built on market provided data, assumptions, and sampling. And the incentives here are not exactly subtle – if you’re a lender facing an industry-wide investigation into wrongdoing, you don’t show up to the regulator’s data-gathering exercise waving a banner that reads “WE OVERCHARGED EVERYONE, A LOT”.

In fact, the FCA itself has described extensive engagement with lenders, investors, manufacturers and trade bodies, and it has emphasised the need for evidence on “specific concerns” and alternative approaches before it finalises rules (expected February or March 2026).

Now add one more detail lenders won’t enjoy. Under the proposals, where evidence of disclosure is missing, lenders may have to presume disclosure was inadequate (it always was).

So here’s the uncomfortable possibility for the industry. Lenders, in all likelihood, “managed” the narrative of harm while the FCA was building its model, but once they’re forced to run the scheme against their actual book, deal-by-deal, the numbers could balloon.

And if that happens as we suspect, today’s lobbying isn’t about “fairness” at all. It’s about getting the FCA to water the scheme down even further so the lenders’ downside is capped before the real-world totals surface.

Watch the choreography… “We support redress… but not like this”

This is the classic line. Lenders insist they’re committed to fair outcomes, while simultaneously arguing the FCA’s approach is wrong, disproportionate, or legally shaky.

For example, Santander publicly flagged uncertainty about scope, methodology and timing, and suggested “material changes” should be considered, even hinting at the need for government involvement.

Other firms have criticised whether the methodology reflects “actual customer loss” or achieves a “proportionate outcome”.

Translated from bank-speak, that often means “We prefer a system where we pay less, to fewer people, with more friction, and with more ability to rebut or narrow liability.”

The PPI playbook is back

This is where the déjà vu kicks in.

The FCA’s own published data shows that, from January 2011 to December 2019 alone, firms paid around £38.3bn in PPI refunds and compensation.

And PPI became the cautionary tale regulators keep referencing, a slow-burn scandal with a final bill that was enormous, prolonged, and reputationally toxic.

It’s no surprise the FCA has openly framed this motor finance scheme as a way to deliver redress “in an orderly, consistent and efficient way” and avoid an endless saga.

But here’s the kicker… in PPI, the industry repeatedly underestimated provisions early on, yet the numbers kept climbing. If lenders have, as we suspect, similarly downplayed motor finance harm at the modelling stage, they’ll be desperate not to repeat the same mistake, because the market has a long memory and a short temper.

In other words, lenders aren’t fighting because the FCA scheme is generous to consumers. They’re fighting because the industry knows that the FCA’s estimate may be the floor, not the ceiling.

What this means for consumers right now

Even the FCA’s own materials have noted that consumers who complain ahead of the scheme (if it is introduced) may get assessed and paid sooner than waiting to be contacted.

And if the final version of the scheme stays as conservative as currently proposed, consumers will need to pay close attention to whether their redress truly reflects what they paid because commission pushed their APR north.

What is become clearer is that many consumer representatives will seek to take claims via the legal route, which is likely to provide fairer compensation for consumers in comparison to the FCA scheme.

Final thought: when the people holding the pen are still lobbying, follow the ink

If you ever want to understand what’s happening in financial services, ignore the press releases and watch what gets lobbied.

The industry is lobbying because it’s scared. Not of overcompensating consumers, but of what the true scale of harm looks like once the numbers stop being “submitted data” and start being “actual liability”.

And if that sounds familiar… it should. We’ve seen this film before.