For much of the past year, the UK motor finance investigation has felt like something lenders could keep at arm’s length. Important, certainly. Potentially costly, yes. But still, for many, theoretical.
That has now changed - and not just because redress is coming into view.
In recent weeks, many lenders will have received a ‘Dear CEO’ letter from the Financial Conduct Authority (FCA) highlighting a growing issue in motor finance commission complaints: multiple professional representatives acting for the same customer [1].
On the surface, this might sound administrative. In practice, it materially changes the operational reality of redress.
What the FCA letter really means
The current pause on handling motor finance commission complaints ends in May 2026. Once lifted, firms will need to progress cases at pace whether under Dispute Resolution: Complaints (DISP) timelines or a future Consumer Redress Scheme.
The FCA has been explicit: uncertainty over who represents the customer is not a reason for delay.
That introduces a new operational burden. Duplicate or overlapping complaints from multiple claims management companies (CMCs) or legal representatives create friction precisely when speed and consistency will be under scrutiny.
Redress planning has moved from theory to execution.
Understanding the scale
The financial exposure is substantial. FCA consultation materials estimate £8.2-£9.7 billion in redress, potentially rising to £9-£18 billion including administration costs. [2].
At the same time, the industry remains very much active. The UK motor finance market is projected to grow from around £80 billion in 2023 to approximately £110 billion by 2029 [3]. New business continues to flow. Servicing demand remains high.
So, lenders are not preparing for redress in isolation. They are doing it while running a live, high-volume, customer-facing operation.
That dual pressure is where risk builds.
The multiple representation problem
In practice, multiple representation complicates everything.
Instead of a single complaint with a clear line of authority, firms are increasingly faced with duplicate or overlapping complaints for the same customer, submitted by different representatives. That raises immediate questions around authority, communication and progression.
Left unresolved, those questions can spark slow handling and increased inconsistency, precisely what regulators are seeking to avoid.
Meanwhile, volume is already elevated. Hire purchase motor complaints exceeded 76,000 in 2024/25, while total new financial complaints rose 54% year-on-year to over 305,000 [4].
We have reached a ‘perfect storm’ where scale meets complexity.
Vulnerable customers raise the stakes
Add vulnerability into the mix, and the risk multiplies.
Under Consumer Duty, firms must demonstrate fair outcomes and appropriate treatment of vulnerable customers, even when complaints are assessed retrospectively [5]. Many customers engaging CMCs do so because they feel unable to navigate the process themselves.
Add multiple representatives into that dynamic, and the risk of delay, confusion or inconsistent treatment increases.
With complaint uphold rates sitting consistently around 57-58%, decision quality and consistency are no longer abstract concerns, they are practical ones [6].
What ‘good’ looks like now
That means:
- Early identification of multiple representation
- Clear communication with all parties
- Fast resolution of authority
- Consistent, well-documented decisioning
It also means being able to scale without losing oversight. When £283 million in redress is paid in just six months across financial services, even small inconsistencies can translate into material financial and reputational exposur [7].
And flexibility matters. Guidance is still evolving, and firms locked into rigid operating models will struggle as new friction points emerge.
Why internal teams are struggling
For most lenders, the instinct is to handle redress internally. That’s understandable.
But business-as-usual (BAU) servicing demands have not eased. Specialist complaints and vulnerability expertise is already stretched. Redress volumes are unlikely to arrive neatly or predictably, and multiple representation only adds to that uncertainty.
Meanwhile, new car finance volumes rose by around 11% in early 2025, increasing servicing demand at the same time as redress preparation ramps up [8].
Scale too slowly, and firms risk falling behind regulatory expectations. Scale too aggressively, and costs become embedded just as margins tighten.
The case for specialist partners
This is why many lenders are now looking at specialist operating partners, not as outsourcers, but as risk mitigators.
Partners with experience in high-volume, high-scrutiny complaint environments can help manage complexity such as multiple representation, apply judgement consistently, and scale capacity without locking firms into long-term cost. Done well, this allows lenders to retain accountability while maintaining momentum when operational friction increases.
A Firstsource perspective
At Firstsource, we work with UK financial services firms at precisely these moments, when regulatory expectations, customer pressure and operational complexity collide.
In practical terms, that means helping organisations stay on their feet when volumes spike, representation issues arise and scrutiny intensifies. We combine regulatory understanding with flexible delivery models and a customer-first mindset, working as a risk partner rather than a traditional outsourcer.
Looking ahead
Motor finance redress was always going to be challenging. The FCA’s intervention on multiple representation makes clear that it may also be more complicated than many expected.
Firms that recognise these signals early, and adapt their operating models accordingly, will be far better placed to navigate what comes next.
In that way, this redress is not just about putting things right. It is about proving, under pressure, what good looks like in practice.
Find out more about Firstsource's motor finance complaints and remediation solution here.