By Harry Charalambous, Principal Consultant at Broadstone
Summary
Regulatory redress has become one of the most significant operational and governance challenges facing lenders. As firms respond to complaints, historic remediation exercises and evolving FCA expectations, redress methodologies must be accurate, scalable and capable of standing up to scrutiny. Principal Consultant Harry Charalambous explains how Broadstone combines lending expertise, actuarial oversight and advanced analytics to help firms deliver fair, defensible customer outcomes.
Navigating an increasingly complex redress landscape
Delivering redress is no longer just about arriving at the right figure. Whether responding to complaints referred to the Financial Ombudsman Service (FOS), correcting historic redress calculation issues or preparing for future remediation programmes, lenders are increasingly expected to demonstrate that every customer outcome is fair, consistent and supported by a clear, auditable methodology.
Recent developments surrounding the UK car finance redress scheme highlight how quickly regulatory expectations can evolve. With the FCA advising firms to prepare for multiple potential outcomes – including the possibility that no formal redress scheme is ultimately introduced – lenders need calculation frameworks that are flexible enough to respond to changing requirements while continuing to deliver consistent customer outcomes.
At Broadstone, we help lenders tackle these challenges by combining lending expertise, actuarial oversight and advanced data analytics to design, review and implement redress solutions that are technically robust, operationally efficient and capable of standing up to regulatory scrutiny. In this article, I’ll explore some of the common challenges lenders face, and some examples of how we’ve recently helped firms strengthen their redress calculation approaches.
Read more: Complaints rise and redress jumps 20%: firms still need to strengthen customer outcomes
Providing independent assurance that strengthens methodologies
Many lenders have well-established internal calculation processes. The challenge is ensuring those methodologies continue to meet evolving FCA expectations, Financial Ombudsman Service approaches and legislative requirements.
Our independent assurance provides confidence that calculations are not only technically accurate, but also robust, consistent and fully defensible.
Our reviews typically assess:
- Methodologies against FCA, FOS and legislative requirements.
- Calculation logic and underlying assumptions.
- Governance frameworks and supporting documentation.
- Independent validation of calculation outputs.
- Practical recommendations to strengthen existing approaches.
This has become increasingly valuable as lenders prepare for an evolving regulatory landscape and the possibility of different remediation scenarios. We’re already supporting clients as they plan for these different outcomes.
For example, alongside firms preparing for a potential UK car finance redress scheme, we’re working with motor finance lenders to develop and independently assure calculation methodologies should no formal FCA scheme ultimately proceed. By validating these approaches before they’re needed, firms can move more quickly and confidently when the regulatory position becomes clear.
Read more: Motor finance redress: what loss-based APR recalculation means for redress delivery
Developing scalable redress calculation solutions
Many organisations still rely on manual calculations or legacy spreadsheets. While these approaches may work for individual complaints, they often become difficult to govern as complaint volumes increase, methodologies evolve and customer scenarios become more complex.
Our team develops automated solutions that help lenders:
- Improve calculation consistency.
- Reduce manual processing.
- Create fully auditable outputs.
- Manage large-scale remediation exercises.
- Adapt methodologies as regulatory expectations evolve.
Whether firms are reviewing how redress payments are calculated, enhancing an existing methodology or developing an internal FCA redress calculator, our focus is on delivering solutions that improve operational efficiency without compromising customer outcomes.
Recently, we reviewed a major UK credit card lender’s affordability complaint redress calculations against Financial Ombudsman Service guidance before designing and implementing a new automated calculation solution. The result was a more scalable process that improved calculation consistency while significantly reducing manual effort.
Read more: FOS Reports Surge in Irresponsible Lending Complaints – What Firms Need to Do on Remediation
Combining lending expertise with actuarial rigour
Successful remediation programmes require more than technical calculation capability. They require specialists who understand lending operations, regulatory expectations and the judgement needed when historic data is incomplete or methodologies continue to evolve.
Broadstone brings together:
- Experienced consumer lending specialists.
- An actuarial redress team with more than 30 years’ experience supporting banks, insurers and other financial institutions.
- Advanced data analytics capability.
- Proven expertise delivering complex remediation programmes.
This combination enables us to support every stage of a redress programme – from reviewing methodologies and validating assumptions through to designing automated calculation engines and delivering large-scale remediation exercises.
Broadstone recently reviewed a Tier 1 UK bank’s loan calculation system against Consumer Credit Act requirements following the identification of potential calculation issues. Our review involved validating system calculations, assessing customer impact and providing practical recommendations to support both remediation and ongoing compliance. This demonstrates the value of combining lending expertise with actuarial analysis when firms need confidence in complex calculation methodologies.
Where calculation methodologies require actuarial judgement, particularly where historic data is incomplete or assumptions need to be evidenced, our team provides the technical rigour and independent assurance that regulators increasingly expect.
Supporting your next redress programme
As regulatory expectations continue to evolve, lenders need more than accurate calculations. They need redress methodologies that are scalable, transparent and capable of adapting as regulation changes.
Whether you’re developing a new calculation methodology, reviewing an existing approach or looking to improve the operational efficiency of established processes – such as distress and inconvenience calculations – Broadstone combines practical lending experience with actuarial excellence to help deliver fair, consistent and defensible customer outcomes.
