The FCA has announced an update on the Motor Finance Compensation Scheme consultation, confirming that the consultation period has been extended. Originally due to close on 18 November, the new deadline is now 12 December 2025.
The regulator also expects to publish final rules in February or March 2026, when the scheme will formally begin.
This update offers firms a little more time but not a pause.
In their statement, the FCA made it clear:
“We are clear, however, that complaints cannot be paused indefinitely. It is therefore important, in particular for lenders, to maintain the pace so we can draw a line under this issue and bring certainty to their customers, the market and investors. This will ensure a trusted motor finance sector can continue to serve millions of families every year.”
That message underlines a key point: momentum must not slow. Firms should continue their operational planning, data assessments and governance preparations to ensure they are ready once the scheme goes live.
Key changes and their implications
The FCA has already clarified which agreements are in scope, how redress should be calculated, and the expected delivery timelines. Governance and transparency remain central, the regulator has reinforced that strong oversight is just as vital as accurate financial calculations.
Firms can no longer rely on broad frameworks; they must establish clear, actionable procedures to ensure consistency, accuracy and full compliance. Many will need to address incomplete historical data, fragmented workflows and gaps in cross-team collaboration, turning these operational challenges into opportunities to strengthen internal resilience.
Turning compliance into strategic advantage
The FCA’s guidance goes beyond regulatory compliance, it presents a strategic opportunity. Firms that act early and take a structured, insight-led approach can embed a culture of compliance and fairness, improving both customer outcomes and regulatory confidence. Those who do will be ready for the redress scheme but also enhance their standing in the market.
To prepare effectively, firms should focus on three priorities:
- Identify agreements in scope – review all regulated motor finance agreements to confirm potential eligibility for redress.
- Design effective remediation processes – balance operational efficiency with accurate calculations and delivery.
- Implement robust governance and oversight – define clear roles, accountability and transparent reporting structures.
The balance of people and technology
The introduction of process automation will play a crucial role in managing scale from redress calculations to customer communications. Yet is must be noticed that human expertise remains essential for complex cases and quality assurance. Firms that integrate both are set to deliver fair, efficient and consistent outcomes.
Building internal capability is equally important. This means upskilling teams – in some cases increasing teams, strengthening quality assurance, and implementing scenario planning to anticipate challenges. Those who invest early will be best positioned to deliver redress accurately and at scale.
What’s next for motor finance firms
The FCA’s extension provides an opportunity not a reason to delay. As the regulator emphasised, complaints cannot remain paused indefinitely, and maintaining pace is essential to restore confidence in the motor finance sector.
At Momenta, we’re helping firms build the operational capability, expertise and governance structures required to meet the FCA’s expectations and deliver redress effectively.
Now is the time to stay proactive and ready.
See the solution in action. Book your free demo today and discover how our tech-powered redress platform can help you deliver FCA-ready remediation at scale faster, smarter, and with zero development cost
