FLA responds to FCA’s Section 404 motor finance redress scheme

Core Viewpoint - The Finance & Leasing Association (FLA) has expressed concerns regarding the UK Financial Conduct Authority's (FCA) proposed Section 404 motor finance redress scheme, emphasizing the need for adjustments to ensure fairness and targeted compensation for affected consumers [1][2][3]. Group 1: FLA's Response to FCA Proposal - The FLA supports a credible redress process but believes the current FCA proposal does not align with its own standards, calling for changes to ensure only those who have genuinely suffered loss are compensated [2][3]. - The association argues that the FCA's approach may lead to compensation for individuals who did not experience harm, potentially diverting resources from those truly entitled to redress [3][4]. - FLA CEO Shanika Amarasekara highlighted that their submission is based on extensive analysis by industry experts, aiming for a fair outcome for both borrowers and lenders [3][4]. Group 2: Proposed Adjustments and Industry Collaboration - The FLA suggests alternative methods for assessing liability and consumer loss, aiming to create a workable and credible scheme that protects consumers' future access to finance [5]. - The association emphasizes the importance of collaboration between the regulator and the industry to deliver swift redress to those in need while maintaining a fair process [5]. - Earlier data from the FLA indicated a 3% increase in new consumer car finance business in October 2025 compared to the same month in 2024, reflecting ongoing market activity [6].