PCP Claims: October 2025 Market Update
In October 2025, the Financial Conduct Authority (FCA) released its most detailed update to date on the proposed redress scheme for consumers affected by undisclosed commissions in car finance agreements.
The announcement marks a key turning point in the motor finance claims market, offering greater clarity on liability and compensation, although exact timelines are still to be confirmed.
Latest Developments and FCA Proposal
The FCA’s October announcement builds on the Supreme Court’s August 2025 judgement, which confirmed that undisclosed discretionary commission models can create unfair relationships under the Consumer Credit Act 1974. The ruling places the burden on lenders to prove that commission arrangements were adequately disclosed to consumers.
Together, the Supreme Court judgement and the FCA’s proposal provide a clear framework for how the industry will move forward.
Key Features of the FCA’s Proposed Scheme:
- Scope: Agreements entered into between 2007 and 2021 involving discretionary or high-commission models will be eligible.
- Average Redress: Estimated at £700 per consumer.
- Market Exposure: Total cost to lenders projected between £8 billion and £11 billion.
- Approach: The scheme aims to deliver compensation in a structured, system-managed way that avoids destabilising the lending market.
Timeline of Key Events
| Date | Milestone |
| Jan 2021 | FCA banned discretionary commission models to eliminate incentives for brokers to inflate interest rates. |
| Mar 2024 | Clydesdale Bank launched a judicial review against the Financial Ombudsman Service; FCA intervened in support of the Ombudsman. |
| Dec 2024 | The Supreme Court granted permission to appeal in the Johnson, Wrench, and Hopcraft cases. |
| Aug 2025 | The Supreme Court ruled that undisclosed commissions created unfair relationships under the Consumer Credit Act. |
| 3 Aug 2025 | The FCA announced plans to consult on a redress scheme for historic commission-based motor finance agreements. |
| 7 Oct 2025 | The FCA published a Consultation Paper proposing a redress scheme covering around 14 million agreements. |
| Dec 2025 (expected) | The FCA is expected to extend the current pause on complaint handling to allow firms time to prepare for the redress scheme. |
| Early 2026 (expected) | The FCA is expected to publish final rules and guidance in early 2026, enabling firms to begin processing compensation claims. |
Market Implications
The FCA’s consultation signals the beginning of the end of the waiting period for the motor finance claims sector.
The combined clarity from the Supreme Court and the FCA’s consultation framework has reduced legal ambiguity and defined a clearer commercial path for lenders, claims firms, and funders alike.
Market participants can now start modelling case economics with greater confidence – though operational delivery will remain critical to achieving viable returns.
Success in the next phase will depend not just on volume, but on operational efficiency, data accuracy, and regulatory compliance.
Fenchurch Legal’s Position and Outlook
As previously mentioned, Fenchurch Legal adopted a cautious stance during the period of legal uncertainty, avoiding premature exposure. That discipline has now positioned us well for the next phase.
With the Supreme Court ruling and the FCA’s proposed scheme now aligning, the opportunity is becoming more commercially defined. The numbers are now defined, the legal framework is in place, and the market is shifting from speculation to execution.
We are currently funding one company active in this space and plan to expand selectively as the FCA’s consultation concludes and the final scheme is implemented.
Next Steps
- Consultation closes: Late November 2025
- FCA final guidance: Expected Q1 2026
- Implementation phase: Expected to begin in 2026, once redress calculations and data processes are confirmed
- Fenchurch update: Fenchurch Legal will continue to monitor developments and provide investors with further updates as the market progresses.
