Motor finance and the FCA: what lenders need to know in 2025

The FCA's review of historical discretionary commission arrangements in motor finance has moved from regulatory concern to live litigation. The Court of Appeal's ruling that dealers owed a fiduciary duty to customers — and that undisclosed commissions were a breach — has opened the door to a redress programme that some analysts are comparing in scale to PPI.

For lenders still in the market, the immediate priority is demonstrating that current origination and disclosure practices are robust. That means clear documentation of commission arrangements, consistent disclosure to customers, and an audit trail that demonstrates every case was processed in compliance with current FCA expectations.

Firms that have invested in automated compliance infrastructure are better positioned here. Full case coverage, immutable audit logs, and regulator-ready reporting are not just operational efficiencies — in the current environment, they are evidence of a controlled business. Lenders who can demonstrate that every case was reviewed, every disclosure was made, and every decision was logged are in a materially stronger position than those relying on sampling and spreadsheets.