As we move through March 2026, the UK motor finance industry stands at a historical crossroads. What began as a focused investigation into Discretionary Commission Arrangements (DCAs) has evolved into one of the most significant consumer redress programmes in the history of British financial services.

At Towerhall Solutions and Re-Engage, we have tracked this journey from the initial 2021 ban on DCAs to the landmark 2025 Supreme Court rulings that solidified the legal basis for today’s remediation. With final rules expected from the Financial Conduct Authority (FCA) by the end of this month, the scale of the challenge for finance houses is no longer theoretical—it is operational, urgent, and forensic.

The Evolution of the Crisis: How We Got Here

The timeline of this remediation is a masterclass in regulatory shift, moving from "specific rules" to the broader, outcomes-focused mandate of the FCA Consumer Duty.

  • January 2021: The FCA bans DCAs, ending the practice where brokers could increase interest rates to earn higher commissions.
  • January 2024: A formal investigation is launched into historical motor finance (2007–2021) to assess if consumers were systemically overcharged.
  • August 2025: The Supreme Court delivers a pivotal ruling, confirming that failing to disclose high or discretionary commissions creates an "unfair relationship" under the Consumer Credit Act.
  • Early 2026: The industry prepares for the "Go-Live" of a formal redress scheme covering roughly 14.2 million agreements.

The Facts and Figures (March 2026 Update)

Current industry data and FCA projections paint a sobering picture for lenders:

Metric

Estimated Figure

Total Redress Pot

£8.2 Billion (Redress only)

Total Industry Cost

£11 Billion+ (Including administration & tracing)

Average Payout

Approximately £700 per agreement

Scope Period

6 April 2007 to 1 November 2024

Eligible Agreements

~44% of all motor finance since 2007

Major banks have already made massive provisions: Lloyds Banking Group has set aside nearly £2bn, while Santander has provisioned over £460m. However, for many smaller "captive" or manufacturer-owned lenders, the operational infrastructure to manage this is still being built.

The Three Pillars of Liability

The FCA’s remediation isn't just about DCAs anymore. Redress is triggered by three distinct "unfairness" criteria:

  1. Discretionary Commission: Interest rates adjusted by brokers for profit.
  2. High Commission: Total commission exceeding 35% of the cost of credit and 10% of the loan value.
  3. Undisclosed Ties: Near-exclusive relationships between brokers and lenders that were hidden from the consumer.

The Operational "Elephant in the Room": Forensic Tracing

The FCA has been crystal clear: The responsibility to find the customer sits with the lender. Under the Consumer Duty, finance houses are expected to deliver "good outcomes." This is not an "opt-in" ghost hunt where lenders can wait for a letter; for many, it is a proactive requirement to identify and contact affected parties.

The Data Gap Challenge

Many finance houses are currently staring at "black holes" in their data. Records from 2007 to 2015 are often:

  • Stored in legacy systems that are no longer supported.
  • Have already been obfuscated.
  • Incomplete due to broker firms going bust or changing ownership.
  • Outdated, with customers having moved house 4 or 5 times since the finance was settled.

(NOTE - you will be required to trace and contact any joint signatories and/or guarantors)

The FCA expects a Senior Manager Function (SMF) holder to attest that "reasonable steps" have been taken to locate these people. If a lender relies solely on their last known address from 12 years ago, they are failing their regulatory duty.

"A bank's failure to maintain a digital footprint of a customer from 2009 does not absolve them of the debt—or the redress. The burden of proof has shifted: lenders must prove they couldn't find the customer, rather than customers proving they exist."

Likely Outcomes: What Happens Next?

  1. The "Opt-Out" Surge: For the 4 million+ people who have already complained, the process will be "opt-out." Lenders must calculate redress and offer it automatically by late 2026.
  2. The Tracing Bottleneck: Millions of customers will be "uncontactable" via standard mail. This is where the industry faces its greatest reputational risk. If the "lost" 15% of customers are not found, the FCA may demand further industry-wide "unclaimed money" pots.
  3. Forensic Intervention: We anticipate a sharp rise in the use of third-party specialists. High-level tracing isn't just about a "soft" credit search; it’s about human intelligence and digital forensics to ensure the right person receives the right payment, preventing fraud and meeting the Duty of Care.

How Towerhall & Re-Engage Can Help

At Towerhall Solutions, we specialise in the "hard to find." Since 1999, we have achieved a 80%+ success rate in forensic tracing and asset recovery.

While many banks are struggling with "data decay," our Re-Engage system is designed specifically to reconnect businesses with lost customers through an ethical, human-first approach. We don't just find an address; we use intelligent case handling to ensure the contact is compliant, empathetic, and yields the "Good Customer Outcome" the FCA demands.

The clock is ticking. Are your systems ready to find the 14.2 million?

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The "Traceability Gap": Why Internal Systems Will Fail

Most finance houses have robust internal data for active customers. However, the FCA remediation goes back to 2007. In the world of data, 2007 is the "Stone Age."

Lenders are currently discovering that while they can easily identify who is owed money, they have no idea where they are. Customers have married, divorced, moved house multiple times, or passed away. Standard credit bureau "batch traces" often return "no-hits" or outdated information for 15–20% of these legacy files.

This is the Traceability Gap—and it is where regulatory fines and reputational damage live.

The "Road to Redress" Tracing Map

To ensure your firm meets the "Good Customer Outcomes" mandate, your tracing strategy should follow this four-stage hierarchy:

1. The Internal Audit (Weeks 1–4)

  • Action: Extract all historic data from legacy systems.
  • The Wall: You will find "broken chains" where data was lost during system migrations or broker firm collapses.

2. Credit Bureau Batching (Weeks 4–8)

  • Action: Run bulk "soft searches" to update addresses for customers from the last 5–7 years.
  • The Wall: High failure rates for agreements settled 10+ years ago. These "Gone-Aways" are your highest risk.

3. Digital Footprint Analysis (Weeks 8–12)

  • Action: Use multi-source electronic verification (Email, SMS, Social footprinting).
  • The Wall: Risk of "Unverified Contact." If you send sensitive redress offers to the wrong person, you are in breach of GDPR.

4. The Towerhall Handover: Forensic Tracing (The Final Mile)

  • The Handover Point: When automated systems return a "No Trace" or "Low Confidence" result, the file must move from system-led to human-led investigation.
  • The Towerhall Advantage: We step in where the algorithm stops. Using Re-Engage, we apply forensic investigative techniques to find the "untraceable" 15%. This ensures that your SMF holder can confidently attest that every reasonable step was taken to provide redress.

Your Regulatory Responsibility: Integrity Without Exception

The FCA is not just looking for a "best effort" via a bulk mailer. They are looking for evidence of delivery.

A Warning to Senior Managers: Under the SM&CR (Senior Managers and Certification Regime), the responsibility for the success of this remediation is personal. If a significant percentage of redress remains unpaid because your "tracing process" was insufficient, the regulator will view this as a failure to prevent foreseeable harm.

How Towerhall Closes the Gap

We don't just provide a "last known address." Our Forensic Tracing Service provides:

  • Verified Residency: Confirmed through various non-credit data points.
  • Deceased Estate Management: Identifying next-of-kin for eligible redress where the original customer has passed away.
  • Audit-Ready Reporting: Full "lineage of effort" documentation to prove to the FCA that you went above and beyond standard industry practice.

Don't let the "Final 15%" become your biggest regulatory liability.

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Below is our free Towerhall compliance checklist - tick off to make sure you have everything in place to meet legal requirements and timescales.

Phase 1: Data Integrity & Governance

High-level strategic setup to ensure accountability under SM&CR.

  • [ ] Appoint Lead SMF Holder: Ensure a Senior Manager has formal accountability for the delivery of the redress scheme.
  • [ ] Establish "Lineage of Effort" Logs: Create an audit trail for every decision made regarding data reconstruction for agreements dating back to 2007.
  • [ ] Resource Allocation: Confirm 1st, 2nd, and 3rd-line oversight is in place to prevent "re-work" or FCA challenges later.
  • [ ] Update Wind-Down Plans: Adjust financial and non-financial resource forecasts to account for the total projected redress and admin costs.

Phase 2: Identifying the "Scope Population"

Technical data extraction and initial segmentation.

  • [ ] Identify Eligible Agreements: Segment the portfolio into DCA, High-Commission (≥35% of credit cost), and Tied arrangements.
  • [ ] Bridge Legacy Gaps: Identify years where data is missing due to system migrations (e.g., pre-2014 records).
  • [ ] Broker/Dealer Coordination: Establish data-sharing protocols with historic brokers to fill disclosure evidence gaps.
  • [ ] Exclude Non-Scope Cases: Correctly identify and filter out leasing (PCH) agreements as per PS25/18.

Phase 3: The Tracing & Contact Strategy

The critical phase where standard automated systems often fall short.

  • [ ] Standard Batch Tracing: Perform bulk credit bureau searches for customers with agreements ended within the last 5 years.
  • [ ] Digital Footprint Verification: Cross-reference email and mobile data to ensure "Consumer Understanding" via the right channels.
  • [ ] Address "Unverified" Flags: Identify cases where credit data is "thin" or conflicting (typically 15-20% of legacy files).
  • [ ] Vulnerability Screening: Flag customers who may require tailored communication (e.g., elderly, financially distressed).

🚩 THE TOWERHALL HANDOVER POINT

If you tick "No" or "Unsure" to any of the following, your firm is at risk of failing the Consumer Duty "Avoid Foreseeable Harm" rule. This is where Towerhall Solutions/Re-Engage must be engaged:

  • [ ] Can you confirm the current residency of customers from 2007–2012? (Bureau data is often insufficient for this age).
  • [ ] Do you have a process for locating Next-of-Kin for deceased estates? (Essential to prevent unclaimed redress liabilities).
  • [ ] Is your "No Trace" rate higher than 5%? (The FCA will likely view 10%+ "uncontactable" rates as a failure of reasonable effort).
  • [ ] Can you provide a forensic audit trail of your attempt to find "Gone-Aways"? ---

Phase 4: Redress Determination & Payment

Final execution and closure.

  • [ ] Automated Redress Calculation: Implement the FCA-approved hybrid calculation (APR adjustment vs. commission refund).
  • [ ] Issue Provisional Redress Determinations (PRD): Ensure clear language to meet the "Consumer Understanding" outcome.
  • [ ] Payment Instruction Capture: Securely capture bank details while maintaining anti-fraud safeguards.
  • [ ] Final Reporting to FCA: Document the "Success Rate" of contact to demonstrate proactive compliance.

💡 Pro-Tip for Senior Managers:

The FCA’s March 2026 update confirmed a 3-to-5 month implementation period. Use this window to move your "untraceable" files to Towerhall Solutions. Waiting until the redress deadline to realize you can't find 2 million people is a recipe for a Section 166 intervention.

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