FCA to Lift the Pause on Motor Finance Complaints — What This Means for Firms and Why Preparation Starts Now
As someone who spends a lot of time in the trenches with compliance and complaints teams, I know just how much uncertainty the motor finance pause has created across the industry. So the FCA’s recent update will come as a significant moment for many: the regulator has confirmed that the pause on handling certain motor finance complaints will end on 31 May 2026.
It’s a long runway, but it’s also a clear signal. The FCA is giving itself time to finalise the compensation scheme and giving firms, and consumers, time to prepare. What we do now will shape how smoothly things run later.
Why the pause happened — and why we’re moving forward again
Back in January 2024, the FCA hit “pause” to avoid inconsistent or disorderly outcomes while it assessed whether commission arrangements between lenders and brokers were properly disclosed.
Fast-forward to today: the FCA now has legal clarity from both the Supreme Court and High Court, which means it can set out how firms should manage what’s likely to be a very large wave of complaints.
And importantly, many consumers have already been waiting nearly two years. The FCA’s message is clear: it’s time to start getting these complaints resolved.
The compensation scheme: what we know so far
All signs point to the FCA going ahead with a redress scheme. Complaints that fall inside it will follow dedicated rules and timelines. Those timelines are still being consulted on, and the FCA is using the feedback to make sure the scheme will be workable in practice — something that matters to both firms and customers.
The intention is for the scheme to be broad. That means only a small number of complaints should fall outside of it, reducing the operational complications for firms and helping customers get quicker clarity.
The redress scheme will make it easier for consumers to get satisfaction rather than rely on claims management companies (CMC) and the impact of the scheme needs to be considered by existing CMC’s, or new CMC’s looking to move into this space.
Why the new 31 May 2026 date matters
You might remember that the FCA originally consulted on lifting the pause at the end of July 2026. Bringing that forward to 31 May 2026 is a nod to consumer fairness, but it still provides firms with time to get ready.
For complaints that don’t fall under the scheme, firms will have up to eight weeks after 31 May 2026 to issue a final response — depending on when the complaint was received.
We’re also expecting final scheme rules in February/March 2026, including guidance on how firms should handle complaints that include both scheme and non-scheme elements. The FCA has already hinted that it wants firms to give customers a single, clear response wherever possible — something worth building into your planning.
What consumers need to know
If they’ve already complained: no action needed. If they think they weren’t told about commission and may have overpaid: the FCA says they should complain now.
Our perspective — and where firms should focus their energy
I’m already seeing a clear divide: some firms are quietly getting their data, processes and capacity ready… and others are waiting for the final rules before they move. But in my experience, the firms who start preparing early will navigate 2026 with far less disruption. A few priorities worth considering now:
- Complaint mapping: Identify which complaints are likely to fall inside or outside the scheme.
- Operational readiness: Can your complaint-handling function scale for high volumes?
- Data & disclosure records: Are your historic commission details complete and accessible?
- Customer communication: Start designing comms that are clear, consistent and compliant.
- Consultation engagement: If something in the proposed timelines or processes presents real-world challenges, raise it now while the FCA is still listening.
This is a pivotal moment for the motor finance sector — and for the teams who will be responsible for making the next chapter work. If you’d like support reviewing your current readiness or pressure-testing your complaint-handling plans, we’re always happy to chat.
