The first is the forthcoming Financial Conduct Authority (FCA) redress scheme on motor finance commissions. It is now over two years since the FCA intervened, pausing commission complaint handling while it reviewed the use of discretionary commission arrangements. Subsequent court judgments and the FCA’s consultation on redress have had substantial implications across the sector. The next milestone is imminent, with the finalised redress scheme expected shortly.

Throughout this process, we have advocated for rules that are fair and proportionate for both lenders and consumers, and that address actual harm. Our representations have focused on several key areas: the overall scope of the scheme, the proposed communication strategy for lenders, the absence of an adequate implementation period, and the impact of FOS case fees on smaller members.

An appropriate implementation period is essential to ensure firms are properly prepared, consumers receive good outcomes, and redress is administered effectively, minimising wider disruption to lenders and the market. Similarly, consumer communications
must be proportionate, avoiding unduly burdensome practices and significant cost implications.

It was therefore reassuring to see the FCA’s update on the motor finance redress scheme published last month. The regulator confirmed it would allow an implementation period for lenders and provided greater flexibility on communication methods, moving away from a requirement for recorded delivery letters only.

While these developments are welcome, we continue to engage with the FCA on the scope of the scheme and proposed remedies. We are also in ongoing discussions with the FOS regarding the impact of case fees on smaller member firms, particularly where complaints have no redress liability or no reasonable prospect of success.

We will host a motor finance roundtable shortly after the scheme rules are published. In the meantime, member insights remain invaluable – please continue to share your experiences.

The second matter I wish to address is the Appointed Representatives (AR) consultation. HM Treasury published its proposals in February, setting out legislative reforms to the AR regime. The government’s primary objective is to address identified risks of consumer harm while preserving the regime’s benefits, including competition, innovation, and growth.

These proposals carry important implications for members who are principal firms, AR firms, or those considering either role in the future.

A key proposal is the introduction of a new FCA permission for firms wishing to become principals. While this does not immediately affect existing principals, the Treasury’s intention is to enable the FCA to scrutinise firms upfront, ensuring they possess the necessary expertise, resources, and systems to provide effective oversight of ARs.

Another significant proposal is to extend the jurisdiction of the FOS to ARs. Currently, consumers may only complain to the FOS about an authorised firm. Where a principal is found not to be responsible for an issue caused directly by its AR, no FOS redress route exists against the AR. Extending the FOS’s jurisdiction would allow consumers to bring complaints directly relating to ARs.

The proposals also seek to rationalise the conduct and fitness and propriety frameworks, aligning standards for ARs more closely with those for authorised firms. This is intended to empower the FCA to reduce administrative burdens where appropriate, while maintaining high standards of conduct and accountability.

These are just two of the key regulatory initiatives currently shaping the consumer credit market. The CCTA continues to work across all fronts to ensure members’ interests are represented. As ever, your insights and experiences are vital to informing our advocacy – please do share them with us.