Posted: 12th March 2025
The FCA has released two statements recently on issues which had industry wide concerns. An update on the next steps for motor finance was published yesterday and at the end of February there was an update for wealth firms on expectations around ongoing advice fees.
On motor finance, the regulator has announced it is considering an industry-wide redress scheme if it concludes that motor finance customers have lost out due to widespread failings by firms.
This follows a Court of Appeal ruling that raised the possibility of widespread liability among motor finance firms wherever commissions were not properly disclosed to customers. The Supreme Court will hear an appeal against this judgment from April 1 to 3.
The FCA’s latest communication states that it will firm up next steps no more than six weeks on from a ruling by the Supreme Court.
We can see this as the regulator effectively pegging its own timelines to that of the courts.
On ongoing advice fees, the FCA has concluded the issue is not systemic, but recognises points of failure for some of the firms subject to the review, and requests other firms examine their exposure to the points raised and seek to proactively remediate customers where ongoing advice services have fallen short of regulatory expectations.
These recent publications highlight the need for firms to have a ‘ready to go’ remediation approach. This can be particularly challenging given the changeable landscape and extended periods of uncertainty firms have faced.
So, what are the principles underpinning a good approach, and how can firms make sure they realise benefits from being proactive? What are the signs that additional specialist support may be required to achieve the best outcomes for customers and the business?
Identification and reaction
Finding a customer-impacting problem within your business is never good news. It’s especially uncomfortable if the issue is historic or predates the tenure of those now overseeing functions and controls.
Once the issue has received the relevant exposure internally, ensuring leaders understand the nature and potential impact on the customer base, you need to put in place an approach to rectify up and downstream of where the issue has arisen. This includes the need to remediate customers who have experienced a material impact.
Considering most firms don’t have excess personnel to deploy onto remediation activity and may lack the niche knowledge required to complete the programme of work satisfactorily (especially relevant in the case of industry / sector-wide issues), external specialists are often engaged.
The use of specialist support can deliver the external perspective and delivery capacity you need – especially if it is able to help you benchmark your position against other firms and the latest legal and regulatory guidance.
However, there are a number of lines of enquiry which firms can make internally to support their response when customer issues do arise.
Firms should be looking to understand the principles of a good remediation programme in order to:
- Improve the speed of any response to halt the issue and demonstrate a proactive desire to engage customers to remediate
- Internalise some of the work needing to be executed in order to maximise efficiency
- Understand what a specialist support is required to undertake the formative stages of designing and then delivering a remediation programme
Key thoughts for firms
- Can you manage any incoming complaints or DSAR volume in a way that doesn’t impact your wider operational teams?
With the need to continue providing ongoing services to your current customers, few firms have the capacity to stand up teams and the associated oversight to deliver effective remediation. You will understand the operational flexibility levers available to you as a business and should assess these against the likely scale of any remediation exercise. You should also bear in mind that specialist firms may be able to deliver more with less due to their specialism – from communications which minimise customer contact, to customer segmentation and automated processes. - Can you undertake the work to create a segregated data repository?
Creating and managing remediation cases is often best done in a separate data repository, so you can clearly see what needs to be done and track progress. Having a high-quality data repository provides more options for data analysis, cohort segmentation and automation, making the overall remediation more efficient. - Can you get a head start on designing your customer journeys without knowing the overall roadmap?
Formation of a high-level customer contact strategy and associated journeys (based on rules established through the process of customer segmentation) will assist the speed of your response – it is worth investing in a ‘boilerplate’ approach to customer contact which is compliant and can be quickly tailored to the specifics of the issue you’ve uncovered. Doing this in ‘peace time’ when you are not actively in a remediation situation can be a challenge for firms but will mean you have stronger baseline communications to work from if and when you need to act on individual issues. - Can you interpret FCA requirements when published, to design/operationalise customer treatments?
For mass industry issues, the FCA often provides direct firm input (or directed through s166 findings) or broader publications which can significantly affect how you identify the impacted customer population and calculate redress, where applicable. Staying tapped into regulatory insight and trade association dialogue can be critical to putting you on the front foot for scenario planning and interpreting regulatory requirements when they are made clear. Once FCA requirements become known, it adds significant value to get independent support which can provide assurance that your approach will deliver good customer outcomes in advance of delivering remediation at scale. In most instances, there are multiple ways to deliver good outcomes to customers – the trick is to find independent support to identify the different options and balance all considerations. - Are you able to deliver good outcomes to multiple customers at scale and pace, but cost effectively?
Achieving the right blend of technology and people is crucial to delivering a cost-effective and efficient remediation. Selecting a delivery partner who has invested in the right tools and technologies, or having invested the time into creating these yourself, can ensure greater accuracy, less drawn-out execution and an enhanced customer experience. Not all remediations benefit significantly from technology - it depends on size and scale of activity and the cost to deploy, so being proportionate is key. Considering partners who can offer delivery in offshore locations, whilst maintaining the right knowledge and integrity over the programme, can enable more cost-efficient delivery without compromising on quality. Remediations can be complex in delivery, not just in design, and it is crucial to be able to identify anomalies, pivot to demand and be able to resolve issues. - Will you be able to evidence the outcomes you have delivered?
Telling the story during and after the programme is complete is essential to providing your stakeholders and regulators with confidence that customer impacts and the root causes of issues have been remediated. Planning with the end in sight is crucial to deciding how you will document your remediation journey and create and maintain an audit trail.
Conclusion
Addressing historic issues is often a complex and challenging task. However, firms have options to make this process more efficient and, by assessing internal capability, can start to determine next steps and whether support is needed.
