Navigating the Motor Finance regulatory landscape: How firms can prepare
29 July 2025
The FCA’s recent review of motor finance commission arrangements has thrust the industry into uncharted territory. Following the Court of Appeal’s October 2024 ruling that lenders must clearly disclose broker commissions and obtain informed consent, historic practices are under intense scrutiny. Courts are now considering whether to require compensation for customers mis-sold PCP and HP finance deals before January 2021.
Regulatory pause and timelines
With the FCA and Supreme Court review of Discretionary Commission Arrangements (DCA) and non Discretionary Commission Arrangements, firms face significant challenges that demand urgent, expert intervention. Here are some key events.
Supreme Court ruling:
We await the Supreme Court ruling, which is expected to be delivered on 1 August 2025.
Extension of response times:
Firms do not need to issue a final response to motor finance complaints received on or after 26th October 2024 until after 4th December 2025.
Exploration of a redress scheme:
The FCA is considering a formal redress scheme aimed at ensuring consistent complaint handling, reducing the reliance on claims management companies and covering at a minimum DCA-related complaints and potentially non-DCA commission issues as well. The regulator is expected to respond to the Supreme Court ruling within six weeks.
What firms should do now: Operational readiness
To prepare for the new regulatory challenges, firms should be assessing their operational capacity to manage changes. Key areas to act on now include:
- Data review and customer identification
Analyse historic sales, contracts, and commissions to identify potentially impacted customers and assess redress exposure.
- Complaint handling and communication strategy
Though final responses are delayed, firms are expected to acknowledge complaints promptly, explain the timeline extension, and maintain investigatory momentum where possible.
- Scalable workforce and training
Complaint volumes are expected to surge. Firms should prepare to scale up their operations quickly with trained associates capable of empathetic, consistent communication across high volumes.
- Process reinforcement
Establish robust procedures for complaint triage, case classification, escalation triggers, data preservation, and audit-ready documentation. These controls will ensure consistency across distributed teams and cases.
- Prepare for potential redress scheme
The FCA has signalled that, if the Supreme Court upholds the ruling, it may mandate a redress scheme under s404 FSMA, potentially opting for either opt‑in or opt‑out models. Firms should be ready to comply with whichever framework emerges.
Why early momentum matters
Experience shows delayed or under-resourced complaint programmes result in escalations, inconsistent outcomes and reputational risk. In contrast, firms proactively aligning operations with FCA expectations deliver fairer outcomes and prevent future complaints.
Download our Preparatory guide: Motor finance commission complaints, remediation and redress
How Momenta can help
Momenta specialises in helping motor finance firms navigate this regulatory disruption with confidence:
- Expert guidance and regulatory design: We help you design redress‑ready frameworks that align with FCA expectations and eventual redress scheme models.
- Technology and analytics: From pre‑screening complaint files to root cause analytics, we automate where possible to optimise resolution times, consistent decisions, and auditability.
- Agile workforce deployment: Rapid scaling of trained associates to handle spikes in complaint volume while maintaining quality and empathy.
- End‑to‑end remediation delivery: We have delivered 50+ remediation programmes, supporting firms from data gathering and process set‑up to closure and compliance reporting
As the FCA awaits the Supreme Court ruling, proactive preparation is no longer optional, it’s essential. Engaging early with a partner like Momenta ensures your firm can act efficiently, fairly, and with confidence.
Download our Preparatory guide: Motor finance commission complaints, remediation and redress
Get in touch to ensure you’re ready to deliver fair outcomes, reduce complaints, and protect your customers and reputation.