As far as the ABS primary market is concerned, the dust has settled from the UK motor finance mis-selling episode.
When the FCA’s redress scheme was first laid out last October, it was clear that outstanding ABS transactions would be unscathed, and while there could be some pain for lenders, primary issuance was all set to resume.
Shortly afterwards, Another Fine Mezz declared that the discretionary commission scandal was “in the rear view mirror”.
And we have been proved correct — at least, when it comes to the primary market. After going without an auto ABS deal from November 2024 to September 2025, things are better than just business as usual.
Specialist lenders Oodle and Startline both printed successful trades in recent weeks, while Stellantis returned five years after its last UK issuance to offer a full-stack transaction from its E-Carat shelf. And because its deal is backed only by loans originated since November 2024, it falls outside the FCA scheme’s scope.
Meanwhile, the influential Financing & Leasing Association (FLA) confirmed on Monday that it will not challenge the latest version of the FCA’s scheme.
“As the leading industry trade body, it is our responsibility to consider how regulatory action will affect not only our members and their customers, but also the wider UK lending market, particularly when the scheme is unprecedented in scale and scope, and the impact on the UK economy will be significant,” said FLA chief executive Shanika Amarasekara in a statement.
“We continue to have concerns about aspects of the scheme, but our priority is that a practical solution be reached that ensures timely compensation for consumers while giving the motor finance industry and the wider market clarity and finality on this issue,” continued the statement.
When the Court of Appeal’s 2024 judgment kicked off the whole compensation process, GlobalCapital argued that the ruling was a reminder of the importance of consumer welfare, as the legitimacy of securitization market requires that loans backing deals are made on fair terms and benefit borrowers as well as lenders.
Even if the ABS primary market is back in business and lenders are keen to move from the issue, there will be longer-term repercussions.
Consequences are already being felt. Some investors have said that the situation has made the UK a less attractive jurisdiction for investing in consumer finance.
South African firm FirstRand is one. It put Aldermore Bank on the market earlier this month because Aldermore’s subsidiary MotoNovo is particularly affected by the FCA’s redress scheme.
“The business case for FirstRand to own and operate a UK consumer finance entity, particularly given its disciplined financial resource allocation principles, coupled with the legal and regulatory look-back risk, is not within the group's risk appetite,” FirstRand said in a statement on April 7.
FirstRand said “the total accounting provision” that it had made is £750m, compared to £275m of profits that “the group extracted from motor finance activities from over a decade of motor lending in the UK”.
