The FCA’s proposed motor finance redress scheme could cost the industry a whopping £11 billion, with £8.2 billion in compensation for customers and £2.8 billion in implementation costs. The FLA questions the high figures and demands transparency on the calculations, especially for non-prime and smaller lenders.

Implementation of the scheme presents challenges, as lenders will need to identify eligible customers, assess unfairness, and calculate payouts dating back to 2007. Smaller firms may struggle with data gaps and resource constraints, potentially hindering timely and accurate outcomes. Automation could help, but clean data is crucial.

The FCA aims for fair compensation and market stability with its scheme, but firms are wary of the costs and operational demands. The consultation period runs until November 18, 2025, with final rules expected in early 2026. The industry is focused on assessing the realism and feasibility of the FCA’s plan.

Read more at Yahoo Finance: the big questions for motor finance firms