Financial Services Remediation Advisory · FCA PS26/3 · 2026

DCA Motor Finance
Remediation Playbook

End-to-end operational framework for FCA-mandated discretionary commission arrangement remediation — covering population triage, counterfactual recalculation, settlement execution and programme governance

STAGE 1
Triage & Outreach
Weeks 1–8
STAGE 2
Recalculation
Weeks 5–20
STAGE 3
Settlement
Weeks 16–40+

Click a stage above or use arrow keys to navigate

Confidential · FCA DCA Motor Finance Remediation Programme
Programme Architecture
End-to-End Remediation Value Chain
Click any step to view detailed solution thinking, risks and technology requirements
12.1M
Eligible Agreements
£7.5B
Total Redress (75% uptake)
£830
Average Per Agreement
40 wks
Minimum Programme
1
Stage 1 — Triage & Customer Outreach
Population identification · Data cleansing · Document recovery · Customer notification
Wks 1–8
01
Define Scope & Extract Population
⚠ Inflection
02
AI Data Cleansing (F001–F066)
↕ Loop
03
Missing Document Triage
⚠ Risk
04
CRA Tracing & Vulnerability
↕ Loop
05
Batch Communication (A–E)
06
Triage Output & QA Gate
✓ Gate
2
Stage 2 — Counterfactual Recalculation
Flat rate sourcing · Gross overcharge · Compensatory interest · Reserve provisioning
Wks 5–20
C001
DCA Scope Flag
C007
Counterfactual Payment
⚠ Flat Rate
C009
Gross Overcharge
C013
Compensatory Interest
↕ Dispute
C015
Total Redress Quantum
C018
Net Settlement
C026
Reserve Provisioning P50/P75/P90
Board
3
Stage 3 — Settlement Execution
Offer letters · Customer decisions · Payment execution · FOS escalation · FCA reporting
Wks 16–40+
A
Offer Letter Issued
B
Customer Response Window
↕ Loop
C
Payment Authorisation (BACS)
⚠ CoP
D
Settlement Confirmation
S18
E
FOS Escalation
6–12 mo
F
FCA SUP16 Reporting
Stage 1 of 3
Triage — Population, Data & Outreach
Identifying the eligible population, cleansing agreement data and initiating customer communications
📋
Step 01
Define Scope & Extract Population
Extract all motor finance agreements 2003–2021 from SS01. Apply DCA eligibility filter — commission type DCA/Hybrid, APR delta > 0. FCA and FI must agree population count before any letters are issued.
⚠ Pop Sizing Inflection
🤖
Step 02
AI Data Cleansing (F001–F066)
Run data cleansing platform across all 66 data fields. AI validates ~65% of fields autonomously. Human review queue for fields below 95% confidence. Target <2% error rate validated by actuary.
↕ QA Loop
📂
Step 03
Missing Document Triage
Flag missing broker/customer docs (DT06, DT07, DT10, DT11). Batch chase letters to dealers. 10-working-day SLA. Up to 3 chase cycles. Unrecovered documents registered in the data gap register.
⚠ Broker Non-Response Risk
🔍
Step 04
CRA Tracing & Vulnerability Screening
TP01/TP02 CRA trace for gone-away customers. Mortality suppression via GRO (TP19). Vulnerability screening via TP11. Deceased customer protocol activated for Batch D cases.
↕ Gone-Away Loop
📬
Step 05
Batch Communication Strategy (Batches A–E)
Staggered batch model across five customer segments — Simple (A), Standard (B), Complex (C), Vulnerable/Deceased (D), Disputed/FOS (E). Initial notification, document request, and response loops managed per batch.
Consumer Duty PS22/9 Compliant
CMC Intervention Risk
Stage 1 · Customer Engagement
Batch Communication & Response Management
Five-batch model staggered 4–6 weeks apart — click any batch or communication step for detail
A
~15%
Simple Cases
HP, full docs, clear DCA, run-to-term
B
~35%
Standard Cases
PCP/HP, minor doc gaps, DCA confirmed
C
~30%
Complex Cases
Missing broker docs, multi-product, early settlement
D
~15%
Vulnerable / Deceased
Vulnerability flag, probate, CMC-represented
E
~5%
Disputed / FOS
Prior complaints, FOS referrals, excluded population
Outbound Letter Response Loop
1
Initial Notification Letter
FCA-approved template explaining DCA review. No customer action required yet. 28-day response window. Batches staggered 4–6 weeks apart.
2
Document Request (if needed)
Only for missing customer docs (DT10/DT11). Pre-paid return envelope. Portal upload link for post-2015 cases.
3
Customer Response & Verification
Customer confirms details or uploads documents. CMC may respond on behalf. FOS referral possible at this stage.
Exception Handling
↕
Non-Response Chase Loop
Reminder at Day 14 · Second letter Day 28 · SMS/email if available · Max 3 contacts · Non-response triggers gone-away protocol
⚠
Gone-Away Protocol
CRA trace (TP01/TP02) · Last-known address · FCA reporting if trace fails · Funds held in escrow until resolved
⚖
CMC Intervention Desk
Dedicated CMC portal required · Legal review per claim · Accelerated timeline demands · Litigation risk management
Stage 1 · Data Infrastructure
AI-Led Data Cleansing & CRA Tracing
66 fields validated across two AI/human tiers — click any item for solution detail
AI Cleansing Field Groups
📋
F001–F025
Agreement & Financial Fields
Agreement ID, start date, credit amount, APR, term, TAP — cross-validated across DT01, DT02, DT13, DT15
💰
F031–F036
Commission Fields (DCA Critical)
Commission type, rate, amount, disclosure status — sourced from DT06, DT07, DT08, DT09. Highest risk of missing data.
👤
F037–F048
Customer Identity & PII Fields
Name, DOB, address, NI number — cross-validated with CRA and KYC. GDPR controls apply throughout.
🚗
F049–F066
Vehicle & Security Fields
VRN, make, model, registration year, V5C details — sourced from DT10 and DVLA VES (TP03). Often missing for pre-2010 cases.
CRA & Third-Party Sources
🔍
TP01 / TP02
CRA Full & Tracing (Equifax / Experian)
Full CRA report for identity verification. Tracing service for gone-away customers — current address, phone, employment status.
🪦
TP19
Mortality Suppression — GRO
General Register Office mortality data applied to all cases. Deceased flags trigger Batch D protocol — probate verification before payment.
🚘
TP03 / TP05
DVLA VES & HPI Check
Vehicle registration, make, model, fuel type, finance flag. Used where DT10 (Sales Invoice/V5C) is absent. HPI validates vehicle history.
💛
TP11
Vulnerability Screening
Consumer Duty PS22/9 requires enhanced care for vulnerable customers. Flags trigger Batch D routing with extended timelines and alternative communication methods.
Stage 2 of 3
Recalculation — Counterfactual Methodology
PS26/3 hybrid remedy engine — from DCA scope flag to net settlement quantum
21%
APR Adj — Scheme 1 (Pre-2014)
17%
APR Adj — Scheme 2 (Post-2014)
3%+
Min Comp. Interest Floor (PS26/3)
100%
QA Review for Scheme 1
Calculation Chain (C001 → C018)
C001
DCA Scope Flag
Commission Type = DCA/Hybrid AND APR Delta > 0
Era 2007–2024 (SS01)
C007
Counterfactual Payment
PMT(FlatRate÷12, Term, −Credit)
FlatRate = F017 from DT08 (or FCA ref)
⚠ Pre-2008 Missing Rate Risk
C009
Gross Overcharge
Actual TAP − Counterfactual TAP
= Interest Overcharge
C013
Compensatory Interest
Gross OC × (BoE+1%) × (Days/365)
Min 3% floor · PS26/3 §7.4
↕ Customer Dispute Loop
C015
Total Redress Quantum
Gross OC + Compensatory Interest
Subject to PS26/3 cap (Scheme 1: £1,500 / Scheme 2: £850)
C018
Net Settlement Amount
Total Redress − Prior Redress Paid
= Net Payment to Customer
Key Risk Points
⚠
Missing Flat Rate (Pre-2008)
DT08 rate cards absent for pre-2008 cases. FCA reference rate or FLA market average used as substitute. Actuary must approve methodology. FOS may challenge.
📐
Rule of 78 (Pre-2005 Settlements)
Early settlement rebate recalculation using Rule of 78 adds a separate redress component. DT14 settlement statement required. Actuary-led calculation.
🏦
Securitised Portfolios
Cases in ABS vehicles (G013) — originating FI may not hold the record. SPV servicer must be engaged. Timeline extension typically 8–12 weeks.
📊
Reserve Provisioning (C026)
P50: Full DCA population, flat rate = F017 where available
P75: Missing flat rate cases use FCA ref rate
P90: Rule of 78 + CMC 40% + FOS scope expansion
Stage 2 · Calculation Engine
PS26/3 Hybrid Remedy — Step-by-Step
FCA-mandated counterfactual methodology · Click any calculation step for worked example and solution notes
📅
Scheme 1
Pre-2014 Agreements
6 April 2007 – 31 March 2014. APR adjustment 21%. 100% QA review mandatory. Higher quantum. Legal challenge risk on FCA powers pre-2014.
📅
Scheme 2
Post-2014 Agreements
1 April 2014 – 1 November 2024. APR adjustment 17%. Sampling QA. Launch 30 June 2026. Lower per-case quantum but far higher volume.
⚖
Johnson Cases
Uncapped Commission Repayment
Commission ≥50% TCC + 22.5% of loan. Full commission repaid + interest. Not subject to standard cap. Rare but high-value. Supreme Court 2025 judgment.
🧮
Counterfactual Rate
PMT Formula & Flat Rate Sourcing
Primary: DT08 Broker Rate Card (F017). Fallback: FCA Reference Rate (F018) where DT08 absent. All substitutions require actuarial sign-off.
📈
Comp. Interest
BoE Base + 1% · Min 3% Floor
Simple interest from agreement start to payment date. Annual average BoE base rate per year. 3% minimum floor. Consumer cannot challenge the rate (PS26/3 final rules).
✅
QA Gate
Pre-Offer Sign-Off Requirements
Scheme 1: 100% case review. Scheme 2: Sampling. Senior QA officer signs off. Actuary validates rate methodology. Target <2% error rate before batch proceeds.
🔽
De Minimis
Commission Threshold Exclusions
Pre-April 2014: commission ≤£120 excluded. Post-April 2014: commission ≤£150 excluded. Zero APR deals excluded. Must be documented and notified to customer.
📝
Data Gap Register
G001–G015 Formal Register
Every data gap formally logged with reason code, source attempted, mitigation method and actuary sign-off. FCA will audit. Gaps >5% of population require FCA notification.
↕
Dispute Loop
DISP 8-Week Resolution Window
Customer or CMC disputes quantum. FI has 8 weeks to review (DISP). If unresolved, FOS referral. FOS adjudication adds 6–18 months. Reserve impact at P90 accordingly.
Stage 2 · Financial Provisioning
IAS 37 Reserve Provisioning — P50 / P75 / P90
Board-approved provision scenarios — click any scenario for detailed assumptions and FCA reporting implications
📊
P50 Base Case
Base Provision
£830
Avg per agreement · 75% uptake
Full DCA population. Flat rate = F017 where available. FCA reference rate for <10% of cases. Standard compensatory interest.
£7.5B total · 12.1M agreements
📊
P75 Stress
FCA Ref Rate Scenario
~£950
Estimated avg with FCA ref uplift
Missing flat rate cases (est. 25%) use FCA reference rate. Higher counterfactual overcharge. CMC claims 25% of portfolio.
~£8.5B total estimate
📊
P90 Severe
FOS + R78 + Limitation Extension
~£1,100
Board-approved provision level
Rule of 78 add-on. CMC success 40%. FOS scope expansion. Pre-2003 Limitation Act extension. Board sign-off required at this level.
£11B+ industry total (FCA estimate)
📐
IAS 37 Accounting Basis
Provision Recognition, Accruals & GL Treatment
FA1 — Initial Reserve
IAS 37 P90 provision at population gate. Board-approved level. Discounting for tail >12 months (IAS 37.45).
FA2 — Monthly Accrual
Accrued in GL monthly at case level once calculation complete. Released when payment processed. Movement reported to CFO.
FA7 — External Audit
External auditor validates methodology. FCA reviews top 10 by quantum. Independent actuary review for Scheme 1 cases.
Stage 3 of 3
Settlement — Offer, Response & Payment
From approved offer letter to full and final settlement confirmation — click any step for operational detail
A
Offer Letter Sent
FCA-approved template · Quantum + methodology summary · 60-day acceptance window · Payment options
B
Customer Response Window
Accept/reject/query via portal, post or phone · CMC may respond · Silence = lapsed offer
C
Payment Authorisation
BACS/CHAPS to verified account · CoP mandatory · Deceased → estate · Vulnerable → debt advice
D
Settlement Confirmation
Letter: payment date, amount, tax treatment (S18 FISMA) · Full and final · Case closed
Key Inflection Points
↕
Query & Dispute Loop
Customer disputes methodology or quantum. 8-week DISP. If unresolved, FOS referral. Adds 6–18 months per case.
🏛
FOS Adjudication
FOS decision binding on FI. May award higher quantum. 6–12 month typical timeline. FI must update reserve accordingly.
⏱
Limitation Act Extension
FCA proposed suspension of 6-year limitation. Pre-2003 cases may re-enter scope. Significant P90 reserve impact.
Special Populations
🪦
Deceased Customers
Payment to estate via executor. Probate verification required. Cannot hold in escrow indefinitely. FCA cap on unclaimed funds period.
💛
Vulnerable Customers
Enhanced care team. Alternative payment routing. Debt advice referral if redress would be immediately attached by creditors.
💷
Tax / HMRC — S18 FISMA
Interest component potentially taxable. S18 FISMA notices mandatory. HMRC consultation for collective treatment agreement recommended.
Governance
RACI Matrix — Roles & Accountability
Hover any row for detail · R=Responsible · A=Accountable · C=Consulted · I=Informed
ActivityFinance House (FI)Programme Servicer / SICustomer / CMCActuaryFCA / FOS
Population Extract & ScopingAR—RI
Data Cleansing & AI ValidationAR/A—CI
Broker Document ChaseAR——I
Customer CommunicationsARI—I
Counterfactual RecalculationAR—CI
QA Gate & File ApprovalAR—CI
Offer Letter IssuanceR/ACI—I
Dispute Resolution (FI Level)R/ACI/RC—
FOS Referral HandlingRCR/A—A
Payment Execution (BACS)R/ACI——
FCA SUP16 ReportingR/AC—CA
Programme Close & Sign-offR/AC—CI
R/A Responsible & Accountable R Responsible A Accountable C Consulted I Informed
Programme Timeline
Indicative 40-Week Critical Path
Based on ~50,000-case portfolio · Complex litigation and FOS pipeline can extend Stage 3 to 3–5 years
Workstream Wk 0Wk 4Wk 8Wk 12Wk 16Wk 20Wk 24Wk 28Wk 32Wk 36Wk 40
Stage 1 — Triage Stage 2 — Recalculation Stage 3 — Settlement Cross-Programme
⚠ Note: Timeline assumes clean population extract, broker cooperation, and no material FOS escalation. Complex litigation and pre-2003 Limitation Act extension can extend Stage 3 to 3–5 years. FCA reporting continues until programme formally closed by Board attestation.
Risk Management
Key Risks, Inflection Points & Mitigations
Click any risk card for full mitigation strategy and technology solution
Solution Architecture
Technology Stack & Platform Requirements
AI-enabled remediation platform — click any component for specification detail
🗄️
Data Layer
Population & Agreement Store
SS01 extraction pipeline · AWS S3/Azure Blob document store · Snowflake/Databricks for analytics · Master data management for deduplication
🤖
AI Engine
AI Extraction Engine
NLP field extraction · Confidence scoring · Document classification · Human-in-the-loop for <95% confidence fields
🧮
Calc Engine
PS26/3 Hybrid Remedy Calculator
C001–C018 calculation chain · Actuarial-validated flat rate substitution · P50/P75/P90 reserve model · Audit trail per calculation
📋
Case Management
Pega / ServiceNow Workflow
End-to-end case lifecycle · SLA tracking · Vulnerability flags · CMC portal integration · DISP clock management
🌐
Customer Portal
Secure Self-Service Portal
Document upload · Offer acceptance · Secure communications · CMC authorisation · FCA-compliant audit trail
💳
Payment Engine
BACS / CHAPS with CoP
Confirmation of Payee mandatory · BACS bulk payment runs · CHAPS for urgent/high-value · S18 FISMA notice generation
📊
Regulatory Reporting
FCA SUP16 Dashboard
Automated SUP16 return population · Real-time programme MI · Board reporting pack · FCA portal integration
📂
Document Management
OpenText / Hyland DMS
DT01–DT25 scanned document store · Version control · Retention policy per FCA requirements · Broker and customer upload workflows
🔐
Security & Compliance
GDPR / DORA / FCA ICF
PII encryption at rest and in transit · Role-based access · Penetration testing · DORA operational resilience framework · FCA Information Security framework