The Finance & Leasing Association (FLA) has responded to the UK Financial Conduct Authority’s (FCA) consultation on the Section 404 motor finance redress scheme. Announced in October, the FCA’s proposal would allow for compensation payments related to an estimated 14 million motor finance agreements identified as unfair. These payments could begin as soon as next year. While FLA-affiliated lenders support a credible redress process for affected customers, concerns remain that the current proposal does ...

Core Insights - Mercedes-Benz Group reported weaker results for Q3 2025, with a 7% decline in group revenue to €32.14 billion ($37.37 billion) and a 70% drop in EBIT to €750 million, impacted by reduced gross profitability and significant special charges [1][2] Financial Performance - Group revenue decreased by 7% to €32.14 billion ($37.37 billion) [1] - EBIT fell 70% to €750 million, while adjusted EBIT decreased 17% to €2.09 billion [1] - Net profit declined by 31% to €1.19 billion, resulting in earnings per share of €1.22, a 33% drop [1] Special Charges and Legal Proceedings - Legal proceedings and related measures amounted to €427 million, a significant increase from €20 million, primarily recognized at Mercedes-Benz Mobility [3] - The group increased other provisions related to the UK's motor finance redress scheme by a mid-three-digit million-euro amount in Q3 2025 [3] Segment Performance - Mercedes-Benz Cars revenue fell 7.3% to €23.74 billion, with adjusted EBIT at €1.13 billion, down from €1.20 billion [4] - The division sold 441,453 vehicles in the quarter, affected by market conditions in China and tariff policies in the US [4] - Mercedes-Benz Vans revenue decreased by 13.2% to €4.04 billion, with adjusted EBIT at €412 million; electric van sales increased by 96% [5] - Mercedes-Benz Mobility's revenue slipped 3.4% to €5.80 billion, but adjusted EBIT improved to €313 million from €285 million [5] Overall Trends - Over the first nine months of 2025, group revenue decreased by 8% to €98.52 billion [5] - EBIT dropped 59% to €4.31 billion, with adjusted EBIT falling 35% to €6.63 billion, and net profit halved to €3.87 billion [6]

Core Viewpoint - The FCA's proposed motor finance redress scheme is estimated to cost the industry around £11 billion, which includes £8.2 billion in compensation for customers and £2.8 billion in implementation costs [1] Group 1: Industry Concerns - The Finance & Leasing Association (FLA) expresses skepticism about the FCA's figures, suggesting they are "too high" and calling for transparency regarding the assumptions behind the estimates [2] - Firms are questioning the FCA's modeling, particularly regarding participation rates and assumed losses, especially for non-prime and smaller lenders [2] Group 2: Implementation Challenges - The FCA intends for lenders, rather than brokers, to administer the redress, which places a significant operational burden on lenders [3] - Firms will need to identify eligible customers, assess unfairness, and calculate payouts, often requiring data reconstruction dating back to 2007 [4] - Smaller firms may find the task overwhelming due to data gaps, system limitations, and resource constraints, which could hinder timely and accurate outcomes [5] Group 3: Balancing Fairness and Feasibility - The FCA claims its scheme balances fair compensation with market stability, but firms are concerned about whether the costs and operational demands are proportionate [6] - The consultation period runs until 18 November 2025, with final rules expected in early 2026, prompting the industry to focus on the realism of the FCA's numbers and the feasibility of its plan [7]