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 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.

In October 2025, the FCA published a consultation statement with further details of how the scheme will work — including scope, calculation methods, consumer process and expected cost.

Key Details From the FCA’s Motor Finance Compensation Scheme Consultation

• Scope confirmed: Covers regulated motor finance agreements from 6th April 2007 to 1st November 2024 where a commission was paid by a lender to a broker.

• Timeline updated: The FCA’s consultation closes on 18th November 2025 with final rules set to be published in early 2026.

• Complaints deadline extended: Firms will have until 31st July 2026 to issue final responses to motor finance claims.

What The FCA Redress Plans Mean for Motor Finance Lenders 

The Supreme Court's narrow ruling provided temporary relief. But the FCA's October consultation confirms that a full, regulated compensation scheme is now taking shape, with clear eligibility rules, compensation formulas and consumer processes.

As a result, motor finance lenders now face:

Industry-Wide Compensation Scheme

The FCA has removed uncertainty: the scheme will go ahead, covering unfair motor finance agreements made between 6th April 2007 and 1st November 2024.

It applies where lenders paid brokers a commission that was not properly disclosed to customers, creating an unfair relationship under consumer credit law.

Consumers who qualify will receive compensation plus interest, calculated in line with the FCA’s new redress formula. The scheme will be delivered by lenders, not brokers, to ensure consistency and speed.

Clear Eligibility Rules

The FCA estimates that around 14.2 million agreements (44% of all car finance agreements made since 2007) may be affected. Compensation will apply where at least one of the following features is present:

• A Discretionary Commission Arrangement (DCA), where brokers could adjust interest rates to increase their commission.

• A high commission – defined as 35% or more of the total cost of credit and 10% or more of the loan amount.

• An exclusive or preferential tie between a broker and lender that limited customer choice.

Agreements that don’t meet these criteria, or where disclosure was adequate, will fall outside the scheme.

Affected Motorists Entitled To £700+ Payout

The FCA has proposed a two-tier approach to redress, with the level of compensation reflecting how significant the undisclosed commission or broker relationship was:

In “severe” cases with high undisclosed commissions and contractual ties, consumers receive the full commission amount plus interest.

• In all other eligible cases, compensation will be based on the average of the estimated overpayment and the commission paid, plus simple interest at the Bank of England base rate + 1%.

The FCA’s modelling suggests the average payment will be around £700 per agreement, with total consumer redress of £8.2bn and total scheme cost (including admin) around £11bn.

Consumers Must Apply For Compensation

While a full remediation scheme had been previously discussed, the FCA has now confirmed that motorists will need to take an active step to receive compensation. Motor finance firms are not required to automatically remediate all past agreements.

Instead, the scheme is structured around consumer participation:

• Consumers who have already complained will be automatically included in the scheme unless they opt out.

• Consumers who haven’t complained will be invited to opt in within six months of launch.

• Anyone not contacted can request a review within one year of the scheme starting.

Motor lenders will be required to contact existing complainants within three months of the compensation scheme’s launch.

Tight Implementation Timeline

With the consultation closing in November 2025, final rules due early 2026 and payments expected later in 2026, lenders have until roughly July 2026 to build compliant infrastructure and execute their compensation scheme.

The complaint response deadline has been extended to 31st July 2026, giving firms slightly more breathing space than previously anticipated — but the operational pressure remains significant.

Prepare For An Influx of Motor Finance Complaints 

The FCA expects around 85% of eligible consumers to take part in the compensation scheme — making it one of the largest coordinated redress exercises ever undertaken in UK retail finance.

More than four million DCA complaints have already been made to motor finance firms. Further consumers are likely to opt in – especially as the FCA will run a national advertising campaign to ensure motorists know how to check if they qualify for compensation.

For motor finance lenders, complaint volumes are set to surge in the coming months. Firms will need to have scalable complaints management systems, well-trained teams and automated case-handling capabilities in place to manage the increased workload efficiently and compliantly.

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, 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 latest modelling — £8.2bn in redress and around £11bn total cost — and your firm’s specific exposure.

• Understand your exposure: Determine which historic motor finance agreements could fall within the FCA’s compensation criteria to ensure you can process claims efficiently once the scheme goes live.

• Create customer communication templates: Prepare clear, compliant messaging to support the FCA’s opt-in and opt-out process, ensuring customers understand how to check eligibility and claim.

• Develop quality assurance frameworks: Ensure your systems and processes can make consistent decisions across large case volumes, in line with FCA rules.

• Plan your operational capacity: Forecast resourcing needs across your complaints team to manage the 12–18 month implementation window.

• Assess your complaints management software: Standard CRM systems will struggle with the consistency, scale and audit trails the FCA expects. You may need to invest in specialist complaints management 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 

Compensation 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 compensation process.

Act Now To Get Ready for FCA Requirements  

With the FCA’s consultation now underway and compensation payments expected from summer 2026, motor finance lenders have a narrow window to build the systems and capacity needed to deliver the scheme effectively.

Aptean Respond has a proven track record for managing large-scale compensation 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.

With the FCA expecting lenders to make significant efforts to trace and contact customers—advising the use of data from credit reference agencies, our partnership with global data and technology company, Experian, provides even greater benefits.

Aptean Respond is plug and play with Experian’s data creating a comprehensive offering that streamlines remediation processes and ensures you meet the complex requirements of a mass remediation exercise.

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.