Supreme Court DCA Ruling: FCA Confirms Industry-Wide Redress Scheme Despite Narrow Legal Victory

The Supreme Court has delivered its verdict on Discretionary Commission Arrangements (DCAs). While the legal outcome was more favourable than many predicted, the FCA's immediate response has confirmed what motor finance lenders feared: an industry-wide compensation scheme is definitely happening.

How The Supreme Court Ruled on Discretionary Commission Arrangements 

Contrary to widespread predictions of industry upheaval, the Supreme Court overturned most of the Court of Appeal's decision. On Friday, 1^st August, it released a statement that: 

Rejected bribery claims: Car dealers don't owe fiduciary duties to customers, so commission payments weren't "secret bribes". 

Limited scope of liability: Only one case succeeded (Johnson), where commission was 55% of total credit charges and documentation was misleading. 

Found no widespread "unlawful commission": The other two claimants (Hopcraft and Wrench) failed because some disclosure had been made. 

 The Supreme Court stated that dealers "plainly and properly had a personal interest in the dealings between the customers and the finance companies" and were "motivated throughout by their interest in selling cars at a profit." This destroyed the legal foundation for most expected claims. 

The FCA's Immediate Response Changes Everything 

While the Supreme Court delivered legal clarity that avoided industry-wide liability, the FCA wasted no time in announcing its own path forward.   

Just two days after the ruling, the regulator confirmed it will proceed with an industry-wide compensation scheme regardless of the narrow Supreme Court decision. 

The FCA's 3^rd August statement made clear that its "detailed review of the past use of motor finance" found "many firms were not complying with the law or our disclosure rules." The regulator is now moving ahead with mandatory compensation, arguing that consumers "should be appropriately compensated in an orderly, consistent and efficient way." 

Key Details From The FCA's Compensation Scheme Announcement 

• Consultation by early October 2025: Six weeks open for feedback 

• Scheme launches 2026: Consumers will start receiving compensation next year 

• Coverage from 2007: All agreements back to 2007 will be included 

• Extended scope: Both discretionary and non-discretionary commission arrangements will be included  

• Cost estimates: £9bn-£18bn total industry cost, with most individuals receiving under £950 in compensation per agreement 

What The FCA Redress Plans Mean for Motor Finance Lenders 

The Supreme Court's narrow ruling provided temporary relief. But the FCA's immediate response has effectively restored the original timeline and scope that the industry expected. As a result, motor finance lenders now face: 

Industry-Wide Redress Scheme 

The FCA has removed all uncertainty about whether a scheme will happen. The only remaining questions are operational details around scope, calculation methods and whether it will be opt-in or opt-out. 

Broader Scope Than Expected 

Despite the Supreme Court rejecting most DCA claims, the FCA's scheme will cover both discretionary and non-discretionary commission arrangements. This means the potential impact extends beyond just variable rate arrangements to include standard broker commissions that weren't properly disclosed. 

Immediate Financial Planning Requirements  

The FCA explicitly stated that "firms should now refresh their estimates, ensuring they cover both liability for compensation and the administrative costs."  

Tight Implementation Timeline 

With consultation in early October and the scheme launching in 2026, motor finance lenders have roughly 18 months to build comprehensive remediation capabilities. The complaints deadline has been extended to align with the scheme, but preparation time remains limited.

Prepare For An Influx of Motor Finance Complaints 

The FCA's announcement is likely to trigger a significant increase in people seeking compensation for their car finance agreement.  

UK consumer champion Martin Lewis of MoneySavingExpert has already advised the British public to pursue action, stating on social media: "There's no harm in putting a DIY complaint now to see if you had a Discretionary Commission Arrangement”. 

Over one million people have already used MoneySavingExpert’s free template to lodge a complaint. Motor finance lenders should expect complaint volumes to increase substantially in the coming days and weeks, even before the formal scheme launches. 

FCA Redress Scheme: What Motor Finance Lenders Need to Do Next  

Every affected lender now needs structured complaint management and remediation resources to manage the FCA’s redress scheme.   With the scheme covering agreements back to 2007 and including both discretionary and non-discretionary arrangements, the volume of cases requiring assessment will be substantial.  If you’re affected by the FCA’s call for compensation, here’s what to do next:   

• Refresh your financial provisions: Update your estimates based on the FCA's £9bn-£18bn range and your specific exposure 

• Review all your commission arrangements: Assess both discretionary and non-discretionary arrangements from 2007 onwards 

• Create customer communication templates: Prepare clear, compliant messaging about the scheme and your intended response  

• Develop quality assurance frameworks: Ensure your systems and processes can make consistent decisions across thousands of cases 

• Plan resource allocation: Determine staffing and technology requirements for scheme implementation 

• Assess your complaints management software: Standard CRM systems will struggle with the consistency, scale and audit trails required for a major redress scheme; you may need to invest in specialist remediation software  

Key Features Your Complaints Management Software Will Need  

To make sure your response is up to scratch, make sure you’re using complaints management and remediation software that is able to provide:  

Structured Case Management 

Each case will need consistent assessment against multiple FCA criteria, with full audit trails and quality assurance checks. This requires purpose-built workflows that can handle high volumes while maintaining regulatory compliance. 

Automated Calculation Frameworks 

The FCA will specify compensation calculation methodologies that need to be applied consistently across potentially millions of cases. You’ll need a system that can implement complex formulas while providing transparency and audit capabilities. 

Customer Communication at Scale 

Remediation schemes involve multiple touchpoints with customers, from initial notifications through to final settlements. This requires coordinated communication management with template libraries and approval workflows. 

Regulatory Reporting and Oversight 

The FCA will likely demand detailed progress reporting and scheme monitoring. This process is made easier with comprehensive data capture, reporting dashboards and regulatory submission capabilities built into the remediation process. 

Act Now To Get Ready for FCA Requirements  

 With FCA consultation beginning in October and compensation due in 2026, motor finance lenders have a narrow window to build robust remediation capabilities. 

Manual processing, rework from errors and duplicate efforts will drain your resources. Add potential regulatory fines for poor complaint handling and the overtime needed to clear backlogs, and the financial impact of DCAs could quickly escalate beyond your projections.  

Well-prepared motor lenders are already taking decisive action, recognising that regulatory requirements will be extensive, timelines are tight, and complaint volumes will stretch even the largest organisations. 

Aptean Respond has a proven track record for managing mass remediation exercises. With experience handling PPI and other major financial redress programmes, we bring battle-tested processes that can handle thousands of cases while delivering consistent, compliant outcomes.  

Every affected lender needs access to the same specialist resources, systems and expertise. Waiting to act means you’ll be at the back of a very long queue.  

Act fast: Book a free consultation with Aptean Respond’s experts to get ready for the FCA’s next update.