The FCA’s motor finance redress scheme has created a huge commercial opportunity for claims management companies. It has also opened a long supervisory window. Firms that treat this as a volume play risk finding themselves on the wrong side of the regulator.
In late March 2026, the FCA confirmed PS26/3, its industry-wide motor finance redress scheme. £7.5 billion. 12.1 million eligible agreements. Two schemes running from 2007 to 2024. Claims settling through 2026 and 2027.
For claims management companies, this looks like an extraordinary opportunity - and it is - but the FCA has already been very clear about what happens to firms that get it wrong.
What the FCA Actually Said
Buried inside the scheme confirmation and explicit in the FCA’s accompanying communications is a direct warning to claims firms: robust checks are required. The FCA is actively monitoring how CMCs engage with the motor finance redress scheme. It has already signalled it will not tolerate speculative claims farming, misleading consumer communications, or firms inflating eligibility to maximise fee income.
This is not a theoretical risk. It is a stated supervisory priority.
You could say the FCA has a view that claims management companies are legitimate but high‑risk intermediaries. It tolerated them in PPI because the scale of consumer harm demanded a distribution mechanism. It has since spent considerable energy raising conduct standards for the sector: fee caps, compulsory disclosures, specific FCA authorisation requirements, and direct supervisory attention on whether CMCs deliver genuine value to the consumers they claim to represent and properly consider the needs of the vulnerable.
Motor finance will be no different - probably worse - because this time, there is a structured scheme specifically designed to make CMC involvement largely unnecessary. The FCA has built a mass redress mechanism that is free for consumers to use, firm‑led, and designed to reach people who have not complained. The explicit message is that consumers do not need a CMC to get their money back.
If the FCA finds CMCs adding cost without adding value, or worse, generating claims that fall outside the scheme’s eligibility parameters, expect targeted supervisory intervention. Expect Section 165 requests, Voluntary Requirements (VREQs) and Own Initiative Requirements (OIREQs). Expect Section 166 reviews of senior management, governance and controls, business models, marketing practices and complaint-handling processes. Expect the same enforcement playbook that it used on PPI to be applied faster.
What a VREQ Looks Like in Practice
We are seeing an increase in VREQs across financial services. A Voluntary Requirement, despite the name, is not voluntary in any meaningful sense. It is the FCA telling a firm to stop doing something, restrict its activity, or demonstrate it has fixed a problem, under the implicit threat of formal enforcement if it does not comply.
For a CMC, a VREQ can mean suspension of marketing activity, restrictions on taking new instructions, mandatory customer contact audits, appointment of a Skilled Person under Section 166, and, at its most serious, referral to the enforcement division. All disruptive, stressful and costly. A VREQ does not just create a compliance burden. It creates an existential threat to the pipeline. Firms under a VREQ cannot operate normally. And the FCA’s current posture, moving from rule writing to firm‑by‑firm supervisory intervention, means that being an outlier is now a trigger, not just a risk.
The CMCs who get this right will build a defensible, profitable motor finance practice. The ones who get it wrong will find themselves in a conversation with the FCA that they are not equipped to manage.
The Five Conduct Risks the FCA Will Be Looking For
Based on the FCA's track record in PPI, its stated approach to motor finance, and the specific design of PS26/3, these are the conduct risks that will attract supervisory attention:
1. Eligibility misrepresentation. The scheme has tighter eligibility than the original consultation, 12.1 million agreements, not 14.2 million. CMCs that are marketing to consumers outside the scheme's parameters, or failing to adequately screen before taking instructions, are generating claims they cannot deliver on. That is both a consumer harm issue and a conduct failure.
2. Misleading financial promotions. The motor finance redress story has generated enormous consumer interest. CMCs that promise guaranteed outcomes, overstate likely compensation figures, or fail to clearly disclose fees and the existence of the free scheme face direct regulatory exposure under conduct rules and the Consumer Duty.
3. Inadequate fee disclosure. The FCA is highly attuned to the value question: if a consumer could receive compensation through the free scheme, what value does a CMC actually add? If the answer is not evidenced and documented, the firm's fee model is vulnerable.
4. Poor complaint handling. The scheme creates defined timelines for lenders. CMCs who do not understand those timelines and who generate unnecessary FOS referrals or create friction in the process will be visible as a source of market disruption rather than a legitimate service.
5. Consumer vulnerability failures. The motor finance cohort is broad. It will include vulnerable consumers. The FCA expects CMCs to identify, record and appropriately serve consumers in vulnerable circumstances. A mass-market claim farming model that treats all 12.1 million eligible agreements as identical is a Consumer Duty failure waiting to happen.
What Good Looks Like
The CMCs that will build a durable motor finance practice are the ones who treat this as a regulated advisory mandate, not a claims factory. That means:
A documented eligibility assessment process that screens out ineligible claims before instructions are taken
- A documented eligibility assessment process that screens out ineligible claims before instructions are taken.
- Financial promotions that are accurate, prominently disclose fees and the existence of the free scheme, and are signed off by a senior individual who owns the Consumer Duty outcome.
- A vulnerability identification and recording process embedded in the intake journey.
- A complaint-handling and escalation framework that maps to the scheme's defined timelines.
- MI that captures refusal rates, complaint rates, and outcome data so you can demonstrate fair value if the FCA asks.
None of this is complicated. All of it requires deliberate design.
The Question You Should Be Asking Right Now
The FCA published its motor finance scheme yesterday. The scheme's implementation periods run to June and December 2026, respectively. The consumer complaint deadline runs to August 2027.
That means the supervisory window, the period in which the FCA will be watching how CMCs behave, is now open. It will not close until 2027 at the earliest.
If your firm does not have a documented compliance framework built specifically around the motor finance scheme, you are already behind.
The firms that come through this with their permissions, reputation and pipeline intact will be the ones who treated the conduct risk seriously from day one.
The ones who treated it as a gold rush will find out, the hard way, that the FCA has seen this before.
How Thistle Initiatives Can Help
We work with regulated firms, including CMCs facing FCA scrutiny, supervisory engagement and enforcement risk. We have direct experience with Section 165, VREQs, Section 166 appointments and the supervised recovery process. We also help firms build the compliance infrastructure to avoid getting there in the first place.
If you are building or scaling a motor finance practice, or if you have already received supervisory contact from the FCA, we would welcome a conversation. Get in touch.
Meet the Expert
Nikki Bennett, Partner 
Nikki Bennett has re-joined Thistle Initiatives as a Partner in the Insurance team, working alongside Matthew Williamson. Formerly Managing Director at UKGI, she brings extensive expertise in Delegated Authority markets, MGAs, InsurTech and product development, with a proven record of delivering practical, solutions-driven outcomes for insurance firms. Nikki also continues to serve as a Director at the Association of Professional Compliance Consultants (APCC).