The FCA’s stated goal is to “streamline” the process, ensuring millions of consumers receive compensation within 2026. For lenders, this means the window to prepare for a high-volume, high-velocity redress event could be closing fast.

The FCA has signalled a pragmatic approach to the scheme’s rollout, proposing a three-month implementation period, extending to five months for older agreements. While this provides a brief buffer, the regulator’s intent is clear: firms should be ready to process claims as soon as possible.

A significant change in the latest guidance is the removal of the ‘opt-out’ requirement for people who complain before the scheme starts. Instead, lenders are likely to be expected to proactively inform consumers of their eligibility and compensation amounts within three months of the implementation period ending. This shift places an even greater emphasis on a lender’s ability to quickly and accurately reconcile historical data.

The “streamlined” journey envisioned by the FCA relies heavily on data certainty. However, the proposed look-back period (dating back to 2007) remains a significant hurdle. For many firms, the challenge is twofold: missing historical agreement data and outdated customer contact details.

The FCA estimates that approximately 14 million agreements could be affected. With a significant portion of these dating back nearly two decades, many consumers could lack the necessary paperwork to make a specific redress enquiry. This could lead to a “flood of vague consumer queries” that overwhelms manual operations.

Furthermore, Equifax research indicates that up to 47% of consumers who took out motor finance in 2007 no longer reside at the same address, complicating the FCA’s requirement for proactive outreach.

To help meet the FCA’s expectations for a smooth operation and to support a streamlined consumer journey, lenders should consider focusing on three core pillars:

1. Reconstructing legacy records

Lenders should leverage comprehensive, historical motor finance data to plug gaps in their own systems, ensuring they can validate agreements and calculate redress accurately across the entire look-back period.

2. Precision tracing and outreach

The FCA has moved away from requiring recorded delivery, allowing for digital channels that “best meet consumers’ needs.” To utilise these efficiently, lenders need robust tracing capabilities to reaffirm old addresses and secure up-to-date digital contact information.

3. Mitigate fraud risk in a digital journey

As the process becomes more automated and digital, the risk of fraud increases. Robust ID verification is essential to ensure that “streamlined” payments reach the legitimate claimant and not bad actors.

The FCA continues to advise consumers that there is no need to use Claims Management Companies (CMCs). At Equifax, we are able to support this “direct-to-lender” model through the MyEquifax Car Finance Checker App.

Our app offers consumers a free, impartial, and “paperwork-free” way to access their motor finance history in seconds. We also offer a range of secure verification methods to help consumers retrieve key motor finance agreement information.

For lenders, consumers using this tool could also serve to enhance your redress process:

• Higher quality enquiries: Consumers will be able to provide specific account details, helping you minimise time wasted on vague information and enabling quicker claim triaging and resolution.
• Direct communication: The app empowers consumers to interact with you directly, fulfilling the FCA’s goal of a more cost-effective redress process for them.
• Reliable claims support resource: Refer customers to our free app to enable them to view their agreements, especially for those convinced they had a claim you cannot find.

The FCA’s recent updates emphasise a desire for speed and efficiency, but that is only possible if the underlying data is sound. Equifax can assist by:

• Rebuilding records and plugging data gaps using our database of 35 million accounts to ensure you only pay out on accurate, validated records.
• Mitigating the risk of fraud and helping to ensure claimants are legitimate.
  Finding millions of affected customers who have moved and providing up-to-date digital contact information to help satisfy the FCA’s requirement for proactive contact.
• Helping you manage the workflow of consumer-shared data by implementing a digital-first automated process.

Join us and CCTA us on 1 April for a deep dive into the latest regulatory requirements. We’ll discuss the practical implications of the implementation period, strategies for proactive outreach, and provide a live demonstration of the MyEquifax Car Finance Checker app.

Register your interest here.