The FCA says it is considering over 1,000 responses to its proposals for a compensation scheme for motor finance customers who were treated unfairly.
The regulator says if it proceeds with the scheme, it is "likely to make several changes", with final rules expected later this month.
The FCA intends to "streamline the consumer journey" and make it smoother for firms to operate, planning to introduce an implementation period of three months, with up to five months for older agreements. However, firms could choose to process claims under the scheme sooner.
Under the streamlined process, people who complain before the scheme starts would no longer be asked if they wish to opt out. Instead, within three months of the end of the implementation period, their lender would tell them whether they are owed compensation, and how much.
Consumers receiving a redress offer would be able to accept it immediately, rather than waiting for a final determination.
Even with an implementation period, the FCA says streamlining the process means millions of people would receive compensation in 2026.
As well as providing a better experience for consumers, the FCA says the changes would "help keep the cost of delivering the scheme proportionate".
The regulator added that consumers wanting to complain should do so now as they should get any compensation sooner, reiterating that there is no need to use a claims management company or law firm, and those who do may lose over 30% of any compensation.
Richard Pinch, senior director of risk at Broadstone, commented: “The FCA’s proposed implementation period is a sensible acknowledgement of the scale, cost and complexity involved in delivering a motor finance redress scheme of this size. Firms will need time to review historic agreements, build out operational processes and ensure payments are calculated accurately, particularly where older agreements are involved, to maintain consumer confidence.
“Measures to streamline the process should also help reduce delays and unnecessary friction in getting payments to consumers. The changes seek to strike the right balance between ensuring customers receive any compensation they are owed and maintaining a proportionate cost for firms, which is important for the long-term functioning of the motor finance market.”
Tom Dane, partner with law firm CMS, said: “The FCA says it will be making operational changes to the scheme, but reading between the lines it seems unlikely that the FCA will be willing to make material changes to the substance of the scheme that would reduce its scope and cost for lenders.
“Given concerns with the legality of the scheme in its originally proposed form, there remains the prospect of further legal challenge to the rules once they are published.”
