Warning sign #1: The motor finance redress scheme is suspended — but the compliance obligations are not
On 2 July 2026, the Financial Conduct Authority announced that the Upper Tribunal had ordered a partial suspension of the FCA's motor finance consumer redress scheme pending legal challenges brought by four commercial parties. The suspension means firms are not currently required to calculate or pay compensation, or issue communications regarding compensation owed under the scheme, until the Tribunal proceedings conclude. However, firms must continue to comply with scheme requirements that remain in force, including identifying relevant complaints and agreements, gathering information on commission arrangements and disclosure practices, and notifying complainants who are not entitled to compensation within applicable deadlines. The Tribunal is expected to hear the challenges in December 2026 or February 2027.
Separately, on 16 July 2026, the FCA announced that a joint taskforce — comprising the FCA, Advertising Standards Authority, Solicitors Regulation Authority, and Information Commissioner's Office — had removed or amended 170 misleading motor finance claims advertisements during June 2026, bringing the total addressed since January 2024 to 1,200. The ASA has also launched investigations into motor finance claims advertisements placed by law firms, focusing on fee disclosures, compensation claims, and consumer-facing marketing practices.
The partial suspension of the redress scheme has not reduced the underlying legal and regulatory risk for motor finance firms — it has deferred it, while keeping compliance obligations live. When the Tribunal concludes — likely in early 2027 — a wave of compensation calculations, redress payments, and consumer claims will follow. Firms that use the suspension period to pause all preparatory activity will find themselves significantly behind when the scheme resumes. The parallel crackdown on misleading claims advertising by law firms and CMCs signals that the litigation ecosystem around motor finance is already in full operation
What to watch: Tribunal proceedings in December 2026 or February 2027 which will determine the scheme's final form; ongoing FCA enforcement actions for misleading marketing; and the resumption of compensation calculation and payment obligations once the suspension lifts.
Warning sign #2: Consumer contract terms are now under active CMA scrutiny
On 22 July 2026, the Competition and Markets Authority updated its guidance explaining how businesses can ensure that consumer contract terms and notices are fair and transparent under Part 2 of the Consumer Rights Act 2015. The CMA outlined factors that may make a contract term or notice unfair, explained transparency requirements, and reiterated that businesses cannot rely on unfair terms or notices. The CMA also noted that organisations may face enforcement action where unfair terms are used.
Separately, on 31 July 2026, the FCA updated the Consumer Credit Sourcebook and related guidance to reflect changes introduced by the Digital Markets, Competition and Consumers Act 2024, updating the Unfair Contract Terms and Consumer Notices Regulatory Guide to reflect its consumer protection and redress powers and clarifying its supervisory approach to unfair or unclear consumer contract terms.
Two regulators — the CMA and the FCA — have updated their guidance on unfair contract terms within the same month, and both have explicitly referenced their enforcement powers. This is not coincidence. It is a coordinated signal to businesses that consumer-facing contracts and notices are under active regulatory scrutiny. Any organisation with standard form consumer contracts — in financial services, retail, digital services, or subscription-based businesses — should be reviewing those terms now against the updated guidance. The cost of an unfair term being found in a standard contract is not limited to the individual consumer — it creates exposure across every customer who has signed the same document.
What to watch: CMA enforcement investigations into businesses using unfair standard contract terms; FCA supervisory action against financial services firms whose consumer credit terms do not meet the Consumer Duty standard; and private litigation from consumers relying on the Consumer Rights Act 2015 to challenge contract terms.
Warning sign #3: Consumer duty outcomes monitoring — The FCA has told firms what good and poor look like
On 27 July 2026, the FCA published findings from its review of firms' approaches to monitoring customer outcomes under the Consumer Duty, outlining examples of good and poor practice relating to monitoring frameworks, governance, management information, customer journeys, vulnerability indicators, complaints analysis, and outcome testing. The FCA highlighted that firms should use monitoring to identify poor outcomes and emerging risks, assess performance across different customer groups, and take appropriate remedial action where issues are identified. The publication emphasises the importance of structured governance, evidence-based decision-making, and monitoring outcomes across the full customer journey.
When the FCA publishes a multi-firm review identifying good and poor practice in specific detail, it is setting the standard against which future supervisory visits and enforcement investigations will be measured. The firms that read this publication and do not take remedial action are the ones that will receive enforcement consequences. The explicit identification of poor practice — weak governance, inadequate management information, failure to monitor vulnerable customer outcomes — provides a clear roadmap of what the FCA is looking for. The absence of these capabilities is no longer an unknown risk; it is a documented one.
What to watch: FCA supervisory visits to firms whose outcomes monitoring frameworks do not meet the published standards; enforcement actions where poor customer outcomes can be traced to inadequate monitoring; and personal accountability for senior managers under the Senior Managers and Certification Regime where governance failings in outcomes monitoring are identified.
This content has been prepared based on regulatory and legislative updates identified across UK and EU jurisdictions as at July 2026. It is intended for awareness purposes and does not constitute legal advice.
