If lenders have engaged meaningfully, why do they still say the FCA’s numbers are wrong?

Since the Financial Conduct Authority (FCA) published its motor finance redress proposals, both lenders and industry bodies have said that the regulator’s estimates and assumptions are incorrect. Arguments from across these institutions have included claims that the proposed scheme will overcompensate consumers. Others have argued that the FCA is overstating lenders’ redress liabilities or underestimating what lenders will repay.

These arguments sit awkwardly alongside another claim lenders make, namely that they engaged extensively with the FCA during its work in the motor finance market and provided the regulator with the necessary data. Given that the regulator has built its analysis on lender-supplied information and has reviewed 31.85 million motor finance agreements entered into between 6 April 2007 and 1 November 2024, how can its numbers be materially wrong?

There are only a limited number of coherent answers, and each sits uncomfortably with the motor finance industry’s public posture.

The FCA’s figures are the product of definitions and counterfactuals

To understand why these disputes exist, it helps to separate three distinct components of the FCA’s work:

1. The dataset: the underlying agreements and attributes that the regulator has assessed as part of its investigation.
2. The eligibility rules: what the FCA has chosen to treat as within scope for redress, namely undisclosed discretionary commission arrangements (DCAs), high commission arrangements, or tied arrangements.
3. The loss calculation methodology: how the regulator wants lenders to estimate what a consumer paid compared with what they would have spent in a more transparent or competitive market, including any 'APR adjustment' approach.

Even where all stakeholders are looking at broadly the same data, disagreements will inevitably concentrate around points 2 and 3. That is because these are not purely factual questions, but questions of judgment and policy.

As such, when lenders say ‘the FCA’s numbers are wrong,’ what they often really mean is ‘we do not accept the FCA’s definitions or agree with its modelling,’ which is a wholly different assertion.

If lenders want to raise concerns about the dataset, this becomes a sharper dispute, given that the regulator is working with data supplied by lenders.

How can the FCA’s dataset still be imperfect if lenders provided data?

There are several reasons why the regulator may have received significant volumes of information and still face material uncertainty. However, given the FCA’s work to date in bringing the matter to this point, each of those reasons points to an uncomfortable implication for lenders.

Data can be extensive without being complete or consistent

‘Providing data’ is not the same as providing data that is:

• complete across the relevant period;
• consistent across lenders and product types;
• granular enough to identify commission structures and the nature of any disclosure;
• linkable between broker records and lender records; and
• auditable.

Motor finance is a distributed ecosystem. Car dealers, non-dealer brokers, manufacturer-linked lenders, and banks did not store historical data in a single standardised format. Even where data exists, lenders may not hold it in a way that answers the vital regulatory question: what was disclosed and how did commission or contractual ties affect pricing and consumer outcomes?

If lenders now argue that the FCA’s analysis may be unreliable, one explanation is that the industry’s historic record-keeping was not designed to evidence fairness and disclosure at scale. That is not a neutral point, but one of governance and compliance.

Older agreements are where records are weakest

While the regulator’s redress proposals cover a period of more than 17 years, lenders are typically only required to retain records for six years, creating significant potential blind spots. In addition, over such a timeframe:

• systems change;
• vendors change;
• broker-lender relationships change;
• commission models and other commercial elements change;
• documentation templates and statutory requirements change; and
• retention practices beyond the six-year requirement vary among lenders.

If lenders cannot produce consistent, granular data for older agreements, the onus falls on the FCA to use modelling and sampling to build a fuller picture. That creates a legitimate debate about methodology, but it also raises an obvious question: why were lenders unable to retain or reconstruct the evidence needed to demonstrate disclosure and fair outcomes?

A failure to retain records should not constitute a defence against liability. It is unreasonable for lenders to argue that the FCA's estimates are wrong simply because they destroyed the evidence that would prove the true position. In this scenario, lender criticism of the FCA’s assumptions is less a critique of regulatory competence and more a critique of the unavoidable consequences of record limitations—or their own failure to retain usable records and documentation for longer.

The hardest variables are not the financial ones

The contentious variables in the motor finance mis-selling debate are not things like loan amounts and terms, but:

• whether a DCA existed;
• how commissions were calculated;
• whether commissions and conflicts of interest were adequately disclosed; and
• whether a dealer’s representation of their independence was accurate in the presence of a contractual tie.

If lenders did not capture these aspects cleanly and consistently, then regulatory analysis must rely on estimates and assumptions.

If lenders do hold this data and have provided it to the regulator, the natural follow-up question is: why is the industry still questioning the FCA’s proposed redress outcomes?

A more plausible explanation is that disputes are about assumptions

Where lenders talk about wrong numbers, they are often challenging one or more aspects of the regulator’s proposals.

The scope and thresholds that the FCA proposed

For agreements where mis-selling involved high commissions or a contractual tie, the FCA has to draw the line somewhere. Where it chooses to do so determines how many agreements fall within scope and the liabilities lenders face. A lender can accept that commissions were not disclosed adequately but still argue that a particular threshold is too broad or not aligned with how harm should be inferred.

More data will not resolve that dispute; it will be resolved by a judgment on where the regulator believes informed choice was impaired and where pricing distortion became significant.

The counterfactual: what would have happened in a transparent market?

This is where sophisticated disagreements are most likely to occur. Redress methodology asks a counterfactual question: had the consumer been told about commissions and ties, and had conflicts been appropriately managed, what would the consumer have paid?

Answering that question requires assumptions about:

• how consumers would have behaved with adequate disclosure;
• what alternative offers were available;
• how pricing would have adjusted if commission structures differed; and
• the extent to which particular commission models inflated historic APRs.

Even if perfect data were available for historic agreements dating back to 6 April 2007, there would likely still be profound disagreement on the appropriate counterfactual. One such example is lenders’ arguments that some consumers could not have obtained a cheaper car finance deal even had they known about commissions and considered alternative offers, and therefore suffered no financial harm.

Why do lenders keep saying the FCA is getting it wrong?

There are commercial and legal reasons why the industry is continuing to contest the FCA’s approach, which go beyond a simple ‘because lenders do not want to pay redress,’ even if the core facts are increasingly difficult to deny.

Potential positioning for judicial review and negotiation

Until the regulator publishes its final redress rules, which it says it will do before the end of March 2026, public criticism serves several functions. It signals grounds for challenge and aims to frame the narrative, with the ultimate goal of shifting the FCA's eventual calibration and the content of those final rules.

That is true even where critics know that the underlying market functioning and conduct were problematic. In mass redress, the debate often moves quickly from 'did wrongdoing occur?' to 'how expensive will the remedy be?'

They are reframing policy judgments as factual errors

It is rhetorically effective to say that ‘the FCA is wrong.’ It is less effective, but more accurate, to say ‘we do not like the FCA’s proposed redress scope and thresholds.’ However, the latter frames the redress debate as what it really is: a dispute about where the balance should be struck between scale, simplicity, fairness, and cost.

If lenders have genuinely provided extensive data, then continued claims that the regulator has miscalculated will increasingly sound more like a strategy than a critique.

Is the uncomfortable alternative that lenders did not provide what would settle the debate?

If lenders wish to maintain that the FCA’s estimates are wildly wrong as a matter of fact, then the implication is that lenders either:

• did not provide comprehensive, usable data;
• did not retain it; or
• provided it in a form that could not be validated consistently across the market.

None of those explanations would support industry narratives of high compliance standards aligned with robust governance of disclosure practices.

What this means for consumers and motor finance claims

For consumers, these debates are not merely academic disputes. They matter because they bring three risks into play:

1. Delay risk: continued noise from lenders increases the likelihood of a challenge to the FCA’s redress scheme.
2. Under-compensation risk: if methodology debates or feedback received by the regulator during its redress consultation narrow the scope or compress loss modelling, consumers may be at greater risk of receiving less than their actual overpayment or than the FCA’s estimate of £700 per agreement.
3. Verification risk: as the proposed redress scheme is largely lender-led, consumers may be asked to accept an offer based on terminology and calculations they do not understand and cannot independently test.

Where lenders genuinely believe the regulator's proposals are flawed, a straightforward way to demonstrate this would be to publish a transparent alternative methodology supported by evidence that can be tested. In practice, industry objections are typically framed in general terms, while the underlying data remains largely inaccessible to the broader public.

The core question remains

If lenders engaged meaningfully and supplied the relevant data to the FCA, then it is difficult to justify dismissing the regulator’s estimates. Any reliance on assumptions and modelling due to data gaps is not a regulatory failure, but a predictable consequence of how the market operated and recorded its conduct.

Either way, continuing attacks on the FCA’s analysis and proposed redress scheme raise simple questions for lenders:

• Is the dispute about factual errors, or about the cost of the remedy?
• If it is factual, where is the alternative evidence-based model?
• If it is about cost, why present it as a dispute about truth?

Until lenders address those questions directly, criticism of the regulator will continue to look like little more than an effort to reduce accountability.

Register your motor finance claim now

While the FCA’s proposed motor finance redress scheme means you can lodge a complaint with your lender and pursue compensation yourself at no cost, you may prefer support if you are concerned about dealing with your lender or navigating the scheme.

In addition to managing your car finance complaint, we can also investigate whether you may have grounds for additional claims against your lender, such as for mis-sold GAP insurance or irresponsible lending.

Register your claim with Harcus Parker here.