Motor finance: Demonstrating successful completion of the first stages of the redress scheme

Immediate attention – Leasing Agreement Complaints

The Dear CEO letter confirmed dates and expectation for dealing with on hold Leasing Agreement complaints:

“We expect lenders and brokers to use this period to ensure they can start delivering timely, accurate and fair outcomes to leasing agreement complaints from 5 December 2025.”

Firms should:

• Identify when they need to issue a final response to their existing portfolio of leasing complaints (based on the date the complaints were received); and
• Prepare how they intend to handle and determine these complaints in accordance with the 8-week complaint handling requirements.

PS25/18 added further clarity to the requirements, namely that:

“Although consumers and their representatives may not distinguish between leasing agreements and credit agreements when making a complaint, we expect firms to be able to identify the type of agreement when they receive a complaint.”

“Firms will have up to 8 weeks from 5 December 2025 to send a final response to a complaint about a leasing agreement, less any time that had already elapsed when the extension to send a final response to a leasing complaint started in December 2024”

“….our guidance in DISP 1.6.7G explains that we expect firms to issue a final response that addresses almost all complaints within 8 weeks of receiving them.”

The 8 week window for dealing with on hold Leasing Agreement complaints ends on 30th January.

Senior Management Oversight

The Dear CEO Letter states:

“We expect Senior Managers at lenders and brokers to take responsibility for ensuring their firm is ready for any redress scheme. This includes acting now to ensure there is appropriate second and third-line oversight of the firm's approach.”

Senior Managers should ideally be provided with reporting on progress, risks and findings from the  handling of Leasing Agreement Complaints. As a minimum, they will likely need to understand:

(1) Where their firm is with regards issuing final responses. For example, how many complaints have been responded to or how many are outstanding or ageing.

• Potential Risks: If the firm already have or are likely to have an over 8 week population, Senior Managers/Accountable Owner will need to understand:
  • The size of the population
  • Reasons why the firm will be unable to respond within 8 weeks (Capacity planning, system challenges or data analysis issues, e.g. correct identification of relevant population)
• Senior Managers/Accountable owners will need to demonstrate awareness and understanding of any failings or challenges to determine whether the initial planning or execution was at fault and how any identified issues may impact effective delivery of any future Scheme.
• Inability to plan and execute delivery effectively could undermine the regulators confidence in the firm's ability to deliver future requirements.

(2) What responses/comebacks the firm have received from customers. For example, have customers claimed they did not have a leasing agreement, they had both leasing agreements and DCA/Non DCA agreements and want to know what is happening regarding the outstanding agreements or not all of their complaint points were addressed.

• Potential Risks: Analysis of customer responses/comebacks is imperative to understand not only the reasons for them but also the outcomes. For example:
  • If customers claimed they had a DCA/Non DCA not a Leasing Agreement, and further analysis upholds the customers challenge, to what extent does this undermine the data analysis undertaken by the firm?
  • Further analysis of upheld customer comebacks claiming that not all of their complaint points were addressed should be undertaken to establish the reasons for this. For example, insufficient evidence was gathered to address additional complaints points, or complaints were not effectively triaged to identify where there were additional complaint points.
  • Customer communication should have been reviewed and signed off prior to responding to complaints to ensure sufficient information was provided to ensure customer understanding of next steps for dealing with any additional DCA/Non DCA agreements.
• The FCA have consistently reminded firms to review complaints on receipt, identify which agreements customers held and gather relevant information to respond in line with DISP requirements. Evidence to suggest this was not done consistently and effectively could lead to concerns of poor customer outcomes. Reasons for all of the above need to be determined and evidenced to allay potential concerns relating to, for example, ineffective planning and execution, weaknesses in data analysis and poorly trained resources.

(3) FOS referrals, feedback and outcomes. Whilst there will be a lag in determining what this looks like, there should ideally be defined reporting and escalation routes in place to alert Senior Managers/Accountable Owners to any early indicators of referral volumes and FOS decisions.

If FOS decisions suggest there were issues with the quality of complaint handling, errors in determining the type of product held or delays in responding to complaints, firms need to be able to demonstrate they have identified and addressed the causes of these issues.

• Potential Risks: Issues identified by FOS run the risk of creating greater regulatory and reputational risks. Ideally, the business should identify issues before FOS, allowing them to be on the front foot with explaining how the issues happened and have been addressed to prevent recurrence.

Authored by Mark Aengenheister and Caroline Walters.