Motor Finance Redress – Data is Now the Critical Factor
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September 03, 2025
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The Issue: Billions at Stake
Legal and regulatory scrutiny of historic motor finance practices, including Discretionary Commission Arrangements (‘DCAs’) and commission disclosure, has reached a significant turning point.
On 1 August 2025, the UK Supreme Court delivered its judgment in the test cases of Johnson, Wrench and Hopcraft. The Court upheld a key ruling under the Consumer Credit Act on unfair commission practices and failures in disclosure, while overturning broader findings on fiduciary duties.
In response, the Financial Conduct Authority (‘FCA’) announced on 3 August 2025 that it will consult on a formal compensation scheme under Section 404 of the Financial Services and Markets Act. The consultation will be published by early October, with payments to consumers expected to begin in 2026.
Estimates of timeframe and total exposure differ sharply, though forecasts agree that redress costs are likely to be significant and that planning now is critical.
The Judgment: Redress Consultation Factors
In Paragraph 319 of its judgement, the Supreme Court sets out the factors which could point towards an unfair relationship between a lender and a customer:
‘…the size of the commission relative to the charge for credit; the nature of the commission (because, for example, a discretionary commission may create incentives to charge a higher interest rate); the characteristics of the consumer; the extent and manner of the disclosure (including by the broker insofar as section 56 is engaged); and compliance with the regulatory rules.’
The FCA will publish its consultation by early October. Regardless of the structure, however, the FCA has made it clear that lenders will be expected to identify affected customers.
Identification will require strong data capabilities, including accurate records of historic agreements, commission arrangements, sales channels and disclosure practices.
Based on the factors above, determining customers eligible for redress will most likely be a complicated process, requiring vast amounts of data and analysis to answer the critical question:
How Was Each Customer Treated, According to the Data?
To answer this, firms will need to gather information from across siloed and legacy systems or archived data, creating challenges for clarity and compliance. Systems and data under scrutiny include:
- Dealer and point-of-sale systems (interest rate setting and broker activity)
- Lender finance platforms (loan dates, terms, rates, payments, commissions)
- CRM and complaints systems (disclosures, interactions, history)
- Unstructured data such as scanned agreements, emails and call recordings
Critical data dispersed across multiple platforms and inconsistencies between those platforms undermine confidence, delay decision making and create risk when engaging with regulators or courts. Storing this data in a repository—a single source of truth—enables firms to:
- Identify affected customers and classify agreements
- Quantify commission models and amounts, interest rates and broker activity
- Reconstruct timelines and evidence disclosures
- Defend decisions with clarity and consistency
Properly governed datasets and documented, defensible collection and analytics processes enable accountability with internal and external stakeholders and facilitate discussions with the FCA.
A thoughtful evaluation of available data is an asset and a defence. Supported by documented, defensible collection and analytics processes, this data-centric approach ensures accountability with internal and external stakeholders including the FCA.
Key Case Data to Date
Data will be key to treating customers fairly and accurately during redress. We have analysed data referenced in the Supreme Court case which indicate some of the types of information that are likely to be required.
| Case reference | Ref: EWCA Civ 1282 (Supreme Court) | |||
|---|---|---|---|---|
| Agreement Year | 2014 |
2015 |
2017 |
2017 |
| Vehicle Value | £8,530 |
£8,995 |
£9,750 |
£6,499 |
| Loan Amount | £8,280 |
£5,995 |
£8,750 |
£6,399 |
| Loan Term | Not publicly available |
4 years |
4 years |
5 years |
| APR | 12.30% |
19.30% |
10.20% |
18.10% & 15.10% |
| Interest Rate | 5.50% |
8.75% |
4.32% |
8.00% |
| Dealer Interest Rate Discretion | Not publicly available |
N/A - Fixed |
3.25% to 8.25% |
8.00% to 13.00% |
| Commission Type | DCA |
Fixed |
DCA |
DCA |
| Total Commission Paid | £183 |
£179 |
£408 (£299 DCA) |
£1,650 |
| Disclosure Method | N/A – fully secret |
Clause in contract |
Clause in contract |
Suitability document |
Data referenced in the Supreme Court case. Additionally, two Financial Ombudsman Service (‘FOS’) cases exist with similar data involved, including DCA amounts of £1,146 and £1,326 (approximately 50% and 40% of the cost of finance respectively).
How FTI Consulting Has Helped
Our global experience over decades includes working with firms through some of the UK’s largest redress exercises, including legacy payment protection insurance, interest rate hedging products, payday lending and consumer credit remediation, and has involved assisting with big data compliance reviews and delivering claims management solutions at scale.
Case Study: Audit of the £29.7 Billion UK Energy Relief Schemes (Including Terabytes of Structured and Unstructured Data)
- 40% of the UK energy market
Included 21 million supply points with close to half a billion associated bill items across 16 suppliers. - Secure, high-fidelity data pipelines
Ensured consistent, traceable data. - Deployed machine learning
Extract information from customer energy bills. - Auditable workflow process
Included data analytics, document management and review and validation of discounts applied. - Robust standards
Implemented a common data model and analytics testing programme, aligning testing and reporting across suppliers. - Impact
Increased the number of customers who received the discounts they were entitled to by reducing fraud risk and resolving compliance errors in the Schemes, saving £1,100 for a typical household.
Administering a Government-Mandated Restitution Programme for a Global US-Based Bank
- Strict security requirements upheld
Bank standards were upheld whilst scaling to the demands of a dynamic customer population. - Purpose-built website and portal
Included intake forms, document uploading, Q&A, automated comms and reporting. - Claim analysis, verification and value calculation
With an integrated centralised data repository, expert review interface and MI. - Dedicated call centre and mail process
Supported mail intake channels, enabling distributions and noticing.
- Regulatory engagement
The bank’s Remediation Plan submissions to regulators were sufficiently detailed to gain non-objection responses. - Reputation managed
Customer and public reaction have mitigated initial reputational harm following the Consent Order and Enforcement Action announcements.
Related Insights
Published
September 03, 2025
Key Contacts
Senior Managing Director, Leader of EMEA Data & Analytics
Senior Managing Director, EMEA Head of Financial Services, Forensic & Litigation Consulting
Managing Director
Senior Director