By Harry Charalambous, Principal Consultant at Broadstone
The motor finance redress landscape remains uncertain. The FCA motor finance redress scheme is partially suspended while four legal challenges progress through the Upper Tribunal, covering issues including the scope of the scheme, causation of loss, redress methodology, and compensatory interest. The FCA continues to defend the scheme in full.
The next major milestone is a case management hearing on 5–6 October 2026 (subject to Tribunal availability), covering disclosure, expert evidence, and wider case management. It will also determine whether the main hearing takes place in December 2026 or February 2027.
With final resolution still some way off, lenders that wait for legal certainty risk facing compressed implementation timelines once the litigation concludes.
Key takeaways
- Keep preparing while the legal challenges continue: The October hearing should provide further clarity on the timetable, but lenders should not assume that legal uncertainty removes the need for operational preparation.
- Test the areas highlighted by the FCA: Firms should make sure their population identification, calculation approach, quality assurance, governance, and wider operational processes are ready to work in practice.
- Build capability that can adapt to different outcomes: Validated data, tested calculation engines, clear audit trails, and established assurance frameworks can be adapted more quickly if the current scheme changes than they can be built from scratch.
Talk to Broadstone about preparing for motor finance redress.
The FCA still expects firms to maintain momentum
The FCA’s August feedback on firms’ implementation plans makes clear that lenders should continue preparing despite the ongoing legal challenges.
It identified weaknesses in areas including population identification, calculator validation, quality assurance, and operational readiness.
We are seeing many of the same challenges in our work with lenders:
- Historic data gaps and poor data quality.
- Complex legacy systems and limited knowledge of historical system logic.
- Real-world lending scenarios such as arrears, payment holidays, and voluntary terminations.
- The need for robust, auditable calculation engines that can operate at scale.
These issues will not disappear if the final scheme changes. In many cases, they will need to be addressed under any large-scale redress programme. Whatever the final shape of the scheme, the priority remains the same: delivering fair, consistent and defensible customer outcomes.
Build calculation capability that can adapt to different outcomes
The best prepared lenders are not waiting for the legal position to be settled. They are developing and testing calculation engines, validating data sources, and putting governance and assurance frameworks in place.
That work should remain valuable even if the current scheme is amended or replaced.
Data pipelines, calculation frameworks, audit trails, governance controls, and operational processes can usually be adapted much faster than they can be built from scratch.
Preparing now therefore gives lenders greater flexibility whether the eventual outcome is a modified FCA scheme, delayed implementation, or an alternative remediation approach.
Broadstone is supporting lenders with both calculator development – including contingency approaches for alternative outcomes – and independent assurance of in-house calculators against FCA requirements and remediation best practice.
Operational readiness matters as much as the calculation methodology
For lenders expecting smaller redress liabilities, it may be tempting to wait for greater certainty before investing further in preparation.
The biggest implementation risks, however, often sit outside the calculation methodology itself. Data quality, legacy systems, operational processes, controls, and exception handling can all become significant barriers once a programme moves into delivery.
Those challenges take time to resolve, regardless of the final legal outcome.
The October hearing should provide greater clarity on what happens next. Until then, lenders that continue strengthening their data, calculations, governance, and operational processes will be better placed to respond when the position becomes clearer.
Talk to our team to prepare for motor finance redress
Broadstone supports lenders with motor finance redress calculator development, contingency approaches, and independent assurance of in-house calculation methodologies.
Talk to Broadstone about preparing for motor finance redress.
Key sources
- Financial Conduct Authority (2026), ‘Feedback on motor finance redress scheme implementation plans’, 19 August. Available at: https://www.fca.org.uk/publications/good-and-poor-practice/feedback-motor-finance-redress-scheme-implementation-plans (Accessed: 23 September 2026).
- Upper Tribunal (Tax and Chancery Chamber) (2026), ‘Directions order’, 1 July. Available at: https://www.fca.org.uk/publication/documents/motor-finance-tribunal-directions-order.pdf (Accessed: 23 September 2026).
- Financial Conduct Authority (2026), ‘Respondent’s grounds of response’, 6 July. Available at: https://www.fca.org.uk/publication/documents/motor-finance-legal-challenge-fca-grounds-response.pdf (Accessed: 23 September 2026).
- CA Auto Finance UK Limited (2026), ‘Reply of the First Applicant’. Available at: https://www.fca.org.uk/publication/documents/caaf-reply.pdf (Accessed: 23 September 2026).
- Consumer Voice Limited (2026), ‘Reply by Consumer Voice Limited’, 28 August. Available at: https://www.fca.org.uk/publication/documents/consumer-voice-reply.pdf (Accessed: 23 September 2026).
- Volkswagen Financial Services (UK) Limited (2026), ‘Applicant’s reply’, 28 August. Available at: https://www.fca.org.uk/publication/documents/vw-reply.pdf (Accessed: 23 September 2026).
