A familiar refrain keeps coming from parts of the lending industry. Too much regulation. Too many compliance rules. Too many shackles on innovation. Other industries, they say, do not have to put up with this.
The mood has grown particularly noticeable recently. The FCA published its final Motor Finance Consumer Redress Scheme on 30 March 2026. The Supreme Court had also ruled in Hopcraft, Johnson and Wrench last August.
Trade bodies called for the scheme to be more ‘targeted and proportionate’. The Finance & Leasing Association linked it to broader calls for reform of the Consumer Credit Act and the Financial Ombudsman Service, to ‘unlock innovation and growth’.
I want to push back on that narrative, gently but firmly. There are two reasons the ‘shackles off’ argument does not hold up.
Reason one: financial services is not like other industries
If you have a job, you need a bank account. If you save, you need somewhere to put the money. If you want a house or a car, you may need credit.
There is no opting out.
That is why financial services holds a particular place in people’s lives. When things go wrong, the harm is real and lasting.
It also means consumers do not behave the way some product literature might assume.
Here is a small but telling example. A customer holds both a current account and a savings account at the same bank. The savings account pays a better rate, but plenty of people leave their balance in the current account anyway.
Money in savings feels set aside. Money in current feels like theirs to spend. Researchers call this ‘present bias’: the tendency to value today over tomorrow, combined with a reluctance to switch.
The FCA has documented this extensively. Its 2023 Cash Savings Market Review found that only 10% of easy access savings customers had switched provider in the previous three years. Common patterns in the way people think about money were holding them back.
The Treasury Committee has been pressing banks on this for years. The question: have banks been taking advantage of customers who stay loyal and never switch?
The FCA’s eventual response was the Consumer Duty. This is a rule requiring firms to deliver good outcomes, rather than rely on the fact that customers rarely move.
It pays a lender to leave customers where they are. Guiding them to a better deal reduces profit. But that profit comes from the customer’s pocket.
Multiply that across a population, and you get a slow, creeping harm. It only shows up when someone adds up the overall figures.
Financial services needs tighter regulation than, say, the market for trainers or televisions. The harm here is subtle. It builds up over time, and most people never spot it.
Reason two: other industries are not the wild west either
The second part of the argument is this: every other industry trades freely while financial services is held to account. That is simply not true.
In April 2026, the Competition and Markets Authority (CMA) ordered two driving schools to refund more than 80,000 learner drivers. The AA Driving School and BSM had failed to include a mandatory £3 booking fee in their upfront prices. They were also fined £4.2 million.
It was the first time the CMA had used its strengthened consumer protection powers, which came into force in April 2025. Its chief executive, Sarah Cardell, put the principle plainly: ‘If a fee is mandatory, the law is clear.’ The full price has to be there from the very start, not bolted on at checkout.
In advertising, the rules have tightened considerably. Since June 2019, the Committee of Advertising Practice (CAP) Code has banned ads that push harmful gender stereotypes. Adverts where only women do the cleaning have been ruled against on that basis.
The Advertising Standards Authority has upheld complaints against major brands on this. The argument that ‘it’s just an advert’ no longer wins.
From 5 January 2026, new advertising rules on food and drink came into force across the UK. Products high in fat, salt or sugar are banned from online and TV adverts before 9pm. The list includes pizza, biscuits, ice cream, and certain breakfast cereals.
Foods most people would not think of as junk are now in the regulator’s sights.
The pattern is clear. The days when a company could put shareholder returns ahead of customer outcomes, and call that the natural order of things, are long gone. Consumer focused regulation is the direction of travel everywhere, not a peculiarity of the FCA.
Why the motor finance redress scheme exists
It is worth remembering why we are here.
The FCA did not dream up the Motor Finance Consumer Redress Scheme on a whim. It exists because, between 2007 and 2024, lenders too often paid commissions to dealers in ways that were not fair to consumers under consumer credit law (section 140A of the Consumer Credit Act 1974).
The Supreme Court confirmed this in Mr Johnson’s case last August. It found that a commission worth 55% of the total charge for credit was excessive. The commercial tie between dealer and lender had never been disclosed, making the arrangement unfair.
The scheme is now expected to put around £7.5 billion back in consumers’ pockets. That covers roughly 12.1 million eligible agreements.
That is not £7.5 billion of regulatory excess. That is £7.5 billion of consumer harm that the regulator has taken steps to put right.
It is hard to call that overreach.
However, several lenders have indicated they intend to challenge the scheme in the courts. Any legal proceedings are at an early stage and do not affect consumers’ ability to register a claim.
The wider context
We are several years into a cost of living squeeze that has stretched household finances thin. People do not have the time or energy to read the small print. They cannot compare interest rates across providers when their main worry is whether the weekly food shop fits the budget.
They need clear information. They need products that are fair by default. They need lenders who take responsibility for outcomes, rather than waiting for the customer to spot every problem.
That is what good regulation tries to deliver. Not ‘shackles’, but a baseline of fairness that consumers can rely on without having to fight for it.
A few questions worth asking
Many lenders are tempted to frame recent years as regulation gone too far. Before saying that publicly, a few questions are worth considering:
- Where did the £7.5 billion come from, if not from consumers paying more than they should have?
- Why are other industries also being held to a higher standard, if this is just an FCA fixation?
- And honestly: would your customers say you have been listening?
The era of asking for the shackles to come off is probably over. The better question is simpler. What do genuinely good customer outcomes look like, and how do you build them in by design?
If you had car finance between 6 April 2007 and 1 November 2024, you may be able to claim money back. Find out if you are eligible to make a claim at allegiant.co.uk.
Sources
Financial Conduct Authority, PS26/3: Motor Finance Consumer Redress Scheme (30 March 2026): https://www.fca.org.uk/publications/policy-statements/ps26-3-motor-finance-consumer-redress-scheme
Financial Conduct Authority news statement confirming the scheme (£7.5 billion, 12.1 million agreements): https://www.fca.org.uk/news/statements/fca-confirms-motor-finance-redress-scheme
UK Supreme Court, Hopcraft, Johnson and Wrench [2025] UKSC 33 (1 August 2025). https://www.supremecourt.uk/cases/uksc-2024-0157.html
Competition and Markets Authority action against the AA Driving School and BSM Driving School (April 2026): https://www.gov.uk/government/news/cma-orders-the-aa-and-bsm-driving-schools-to-refund-learner-drivers-over-drip-pricing
Advertising Standards Authority and Committee of Advertising Practice, gender stereotypes rule in force 14 June 2019: https://www.asa.org.uk/news/ban-on-harmful-gender-stereotypes-in-ads-comes-into-force.html
House of Commons Library briefing on advertising of high fat, salt and sugar food and drink: https://commonslibrary.parliament.uk/research-briefings/cbp-10061/
Financial Conduct Authority, Cash Savings Market Review 2023: https://www.fca.org.uk/publication/multi-firm-reviews/cash-savings-market-review-2023.pdf
Finance & Leasing Association consultation response and chair’s speech (February 2026): https://fla.org.uk/news/fla-submits-consultation-response-on-fcas-motor-finance-redress-scheme-calling-for-a-fair-targeted-and-workable-solution/
This article is for general information only. It does not constitute financial or legal advice.
Allegiant Finance Services Ltd is authorised and regulated by the Financial Conduct Authority (FCA). FRN 836810.