FCA Handbook - CONRED 6.4 Fourth and fifth steps: calculating and paying redress

[Note: As a result of applications made to the Upper Tribunal challenging these rules, the Tribunal has ordered that certain provisions in this section are partially or wholly suspended until further order of the Tribunal or until the final determination of those applications. See the notes in specific provisions and this page for further information about which provisions remain in force and which ones are suspended.]

You are viewing CONRED 6.4 Fourth and fifth steps: calculating and paying redress as of . CONRED 6.4 Fourth and fifth steps: calculating and paying redress was last updated on 31/03/2026.

Guidance

Rules

Related resources

CONRED 6.4 Fourth and fifth steps: calculating and paying redress

Fourth step: calculating redress

[Note: As a result of applications made to the Upper Tribunal challenging these rules, the Tribunal has ordered that this provision is partially or wholly suspended until further order of the Tribunal or until the final determination of those applications. See this page for further information about which provisions remain in force and which ones are suspended.]

(1) Where a lender has determined that, in relation to a scheme case, there was an unfair relationship under CONRED 6.3 and the consumer has suffered loss or damage as a result, the lender must calculate the amount of redress payable in accordance with CONRED 6.4.3R to CONRED 6.4.35R.
(2) Where there was a failure to provide adequate disclosure of a high commission arrangement together with a tied arrangement or a discretionary commission arrangement or both, the lender must determine whether there was a very high commission arrangement, and, if so, calculate redress in accordance with the commission repayment remedy (CONRED 6.4.4R).
(3) In all other cases, except where CONRED 6.4.6R applies, the lender must calculate redress in accordance with the hybrid remedy CONRED 6.4.15R to 6.4.16R and calculate and, where required, apply the caps in CONRED 6.4.19R to 6.4.21R.
(4) CONRED 6.4.6R applies to a scheme case under the hybrid remedy, where the consumer paid a minimal cost of credit, offered to 5% of the market at the time (excluding 0% APR agreements). In such cases, no redress is payable.

All references to redress or redress amount in this section include compensatory interest, calculated in accordance with CONRED 6.4.34R.

The commission repayment remedy

(1) The commission repayment remedy applies where the lender has determined in accordance with CONRED 6.3 that there was an unfair relationship causing loss or damage arising from a failure to provide adequate disclosure of;
1. (a) a high commission arrangement that was also a very high commission arrangement; and
2. (b) either or both of:
  1. (i) a tied arrangement;
  2. (ii) a discretionary commission arrangement.
(2) The lender must calculate the commission repayment remedy in accordance with CONRED 6.4.4R.

(1) The amount of redress payable to the consumer under the commission repayment remedy is the sum of A and B where:
1. (a) ‘A’ is the total amount of commission payable; and
2. (b) ‘B’ is compensatory interest on that amount, calculated using the approach in CONRED 6.4.34R, applied from the date the consumer entered into the motor finance agreement until the date of redress payment.
(2) For the purpose of calculating compensatory interest for the provisional redress decision and the redress determination, the ‘date of redress payment’ is the date the relevant communication is sent.

The hybrid remedy and applicable caps

(1) The hybrid remedy applies in all scheme cases where the lender has determined in accordance with CONRED 6.3 that there was an unfair relationship causing loss or damage, other than where the commission repayment remedy applies (CONRED 6.4.3R).
(2) Except where CONRED 6.4.6 applies, for each scheme case, the lender must:
1. (a) calculate the commission repayment remedy in accordance with CONRED 6.4.4R;
2. (b) calculate the total APR adjustment in accordance with CONRED 6.4.8R to CONRED 6.4.14R;
3. (c) apply the amounts calculated under (a) and (b) to the hybrid formula in accordance with CONRED 6.4.16R;
4. (d) calculate the adjusted commission plus interest cap, the adjusted realised cost of credit cap, and, where applicable, the total realised cost of credit cap in accordance with CONRED 6.4.19R to CONRED 6.4.21R; and
5. (e) apply the caps where necessary to determine the amount of redress payable to the consumer under the hybrid remedy in accordance with CONRED 6.4.22R.

No redress for hybrid cases with minimal cost of credit

(1) Where the annual percentage rate of charge paid by the consumer is less than or equal to the 5th percentile annual percentage rate of charge for the year in which the motor finance agreement was executed, as set out in the table in CONRED 6.4.7R, the lender must assess the amount of redress payable to the consumer as £0.
(2) Where (1) applies, the lender must:
1. (a) inform the consumer of the assessment in (1) and reasons for it in a provisional redress decision in a durable medium that contains the information in CONRED 6 Annex 2;
2. (b) provide the consumer with 1 month to respond to the communication in (a); and
3. (c) consider any response to the provisional redress decision in accordance with CONRED 6.4.37R.

Table: Minimal cost of credit by year for the purpose of CONRED 6.4.6R, CONRED 6.4.20R and CONRED 6.4.23R(8)

Year	5th percentile APR (excluding 0% APR agreements)
2007	6.90
2008	5.90
2009	5.90
2010	5.66
2011	4.90
2012	4.73
2013	4.80
2014	4.20

The total APR adjustment

The lender must follow the stages in CONRED 6.4.9R to CONRED 6.4.14R to calculate the total APR adjustment.

(1) Stage 1: the lender must first determine the market adjusted APR for the motor finance agreement.
(2) The market adjusted APR is the annual percentage rate of charge paid by the consumer under the motor finance agreement with the lender multiplied by 0.79.
(3) Where the motor finance agreement includes a discretionary commission arrangement and the lowest rate of interest in the range of interest rates that could have been selected by the credit broker is higher than the figure calculated in (2), the lowest rate of interest should be used instead of the market adjusted APR.

(1) Stage 2: the lender must create a schedule of the consumer’s payments under the motor finance agreement.
(2) Where all actual payment dates and payment amounts are available and the consumer made early settlement payment(s) or partial early settlement payment(s) the lender must recreate the schedule of actual payments, using the annual percentage rate of charge under the motor finance agreement (‘option 1’).
(3) Where option 1 does not apply, the lender must create a schedule using the payment dates and payment amounts contractually agreed under the terms of the motor finance agreement (‘option 2’) where this is possible.
(4) Where option 1 does not apply and it is not possible to create a schedule under option 2, the lender must create an equivalent schedule by applying the amortisation formula at (5), using the annual percentage rate of charge under the motor finance agreement, and assume, when applying this formula, that the motor finance agreement ran for the agreed term and the lender and consumer fulfilled their obligations under the terms of that agreement (‘option 3’).
(5) The amortisation formula is:
1. M = (P × r) / (1 – (1 + r)^-ⁿ)
where:
1. (a) M = monthly payment;
2. (b) P = principal (amount borrowed);
3. (c) r = monthly interest rate (which is the annual percentage rate of charge paid by the consumer under the motor finance agreement divided by 12); and
4. (d) n = total number of monthly payments (term in months).
(6) Where in (3) and (4) (options 2 and 3) there is information to suggest that the consumer made early settlement payment(s) under the motor finance agreement, the lender must calculate these using the formula in regulation 4 of the Consumer Credit (Early Settlement) Regulations 2004 and replace any monthly payments with the early settlement payment(s).

(1) Stage 3: the lender must create a schedule of the consumer’s market adjusted payments.
(2) Where CONRED 6.4.10R(2) or (3) apply (options 1 or 2), the lender must calculate all market adjusted payments, including any early settlement payments, by substituting the annual percentage rate of charge under the motor finance agreement with the market adjusted APR calculated in accordance with CONRED 6.4.9R.
(3) Where CONRED 6.4.10R(4) applies (option 3), the lender must calculate all market adjusted payments using the amortisation formula in CONRED 6.4.10R(5), where r equals the market adjusted APR calculated in CONRED 6.4.9R, divided by 12. The lender must also calculate any early settlement payment(s) by substituting the annual percentage rate of charge with the market adjusted APR.

(1) Stage 4: the lender must create a schedule of payment differentials using the formula:
A - B
where:
1. (a) ‘A’ is the consumer’s payments under the motor finance agreement calculated in accordance with CONRED 6.4.10R; and
2. (b) ‘B’ is the corresponding market adjusted payments calculated in accordance with CONRED 6.4.11R.
(2) Where option 1 in CONRED 6.4.10R(2) applies and the formula at (1) would produce a negative figure, the lender must adopt the actual payment made under the motor finance agreement as the market adjusted payment and set the payment differential to £0 in the schedule.

(1) Stage 5: the lender must calculate the amount of compensatory interest payable on the payment differentials set out in the schedule created under CONRED 6.4.12R.
(2) Compensatory interest payments are calculated in accordance with CONRED 6.4.34R.
(3) For the purpose of calculating compensatory interest for the provisional redress decision and redress determination, the ‘date of redress payment’ is the date the relevant communication is sent.

Stage 6: the lender must calculate the total APR adjustment, which is the sum of:

(1) all payment differentials in the schedule created in accordance with CONRED 6.4.12R; and
(2) all compensatory interest payments on those payment differentials calculated in accordance with CONRED 6.4.13R.

The hybrid formula

The lender must calculate the amount of redress using the formula in CONRED 6.4.16R.

The hybrid formula is:

(C + D) / 2

where:

(1) ‘C’ is the amount calculated in accordance with CONRED 6.4.4R (the commission repayment remedy).
(2) ‘D’ is the amount calculated in accordance with CONRED 6.4.14R (the total APR adjustment).

Caps applying to the hybrid remedy

Where the amount of redress calculated using the hybrid formula exceeds the value of any of the caps calculated in CONRED 6.4.19R to CONRED 6.4.21R, the amount of redress payable is the lowest amount calculated under any of these caps.

The lender must calculate each of the caps in accordance with CONRED 6.4.19R and CONRED 6.4.20R, and, where applicable, CONRED 6.4.21R.

The lender must calculate the adjusted commission plus interest cap by multiplying the amount calculated in accordance with CONRED 6.4.4R (the commission repayment remedy) by 0.9.

The lender must calculate the adjusted realised cost of credit cap in accordance with the stages set out in (1) to (5):

(1) Stage 1 – adopt the schedule of the consumer’s payments under the motor finance agreement created in CONRED 6.4.10R.
(2) Stage 2 – create a separate ‘5th percentile’ schedule by:
1. (a) substituting the annual percentage rate of charge in the consumer’s payment schedule (stage 1) with the 5th percentile annual rate of charge set out in the table at CONRED 6.4.7R for the year in which the motor finance agreement was executed; and
2. (b) recalculating each payment made under the agreement using that rate.
(3) Stage 3 – create a schedule of payment differentials using the formula:
A - E
where:
1. (a) ‘A’ is the consumer’s payments under the motor finance agreement (stage 1); and
2. (b) ‘E’ is the corresponding 5th percentile annual rate of charge payments calculated at stage 2.
(4) Stage 4 – calculate compensatory interest on the payment differentials in the schedule created at stage 3 in accordance with CONRED 6.4.34R(2)(b) and (3) to (5).
(5) Stage 5 – calculate the adjusted realised cost of credit cap, which is the sum of all payment differentials calculated at stage 3 and all compensatory interest payments on those payment differentials calculated at stage 4.

(1) Where the lender can identify the total value of all payments made by the consumer under the motor finance agreement, the lender must also calculate the total realised cost of credit cap.
(2) The total realised cost of credit cap is the sum of A and B, where:
1. (a) ‘A’ is the total value of all actual payments made by the consumer under the motor finance agreement minus the total amount of credit; and
2. (b) ‘B’ is compensatory interest on that amount calculated using the interest rate formula in CONRED 6.4.34R(2)(a) and (3) to (5), applied from the date the consumer entered into the motor finance agreement until the date of the redress payment.

Final redress calculation where the hybrid remedy applies

Redress payable to the consumer under the hybrid remedy is:

(1) the amount calculated under the hybrid formula in CONRED 6.4.16R; or
(2) where the amount at (1) exceeds the value of any of the caps calculated in CONRED 6.4.19R to CONRED 6.4.21R, the lowest amount calculated under any of these caps.

Calculating redress in scheme cases involving more than one motor finance agreement

(1) This rule applies where, in a scheme case, a single motor vehicle sales transaction was financed by more than one motor finance agreement.
(2) The lender must calculate the total amount of commission and assess whether the definition of a very high commission arrangement is met in accordance with CONRED 6.1.5R(4)(a) and (4)(b).
(3) The commission repayment remedy applies where the lender has determined that, in relation to the scheme case, there was an unfair relationship causing loss or damage arising from a failure to provide adequate disclosure of:
1. (a) a high commission arrangement that was also a very high commission arrangement, assessed in accordance with (2); and
2. (b) either or both of:
  1. (i) a tied arrangement;
  2. (ii) a discretionary commission arrangement.
(4) (a) Where (3) applies, the lender must calculate the commission repayment remedy in accordance with CONRED 6.4.4R for each motor finance agreement.
1. (b) The total redress is the sum of the amounts calculated in (a).
(5) In all other cases, the hybrid remedy applies, and the lender must calculate:
1. (a) (i) the commission repayment remedy in accordance with (4) and the total APR adjustment in accordance with CONRED 6.4.9R to CONRED 6.4.14R, for each motor finance agreement; and
  1. (ii) redress under the hybrid remedy, by applying the amounts in (i) to the hybrid formula in CONRED 6.4.16R for each motor finance agreement and then calculating the sum of these amounts;
2. (b) the adjusted commission plus interest cap in accordance with CONRED 6.4.19R, for each motor finance agreement and then the sum of these amounts;
3. (c) the adjusted realised cost of credit cap in accordance with CONRED 6.4.20R for each motor finance agreement and then the sum of these amounts;
4. (d) the total realised cost of credit cap in accordance with CONRED 6.4.21R, where this can be calculated for all motor finance agreements, and then the sum of these amounts.
(6) The total redress payable is the lowest amount calculated under (5)(a)(ii) to (d).
(7) When calculating the commission repayment remedy in (4) and the adjusted commission plus interest cap in (5)(b), where the total amount of commission payable in relation to any agreement involved in the transaction is not known, the lender must divide the total amount of commission calculated in accordance with (2) by the number of agreements involved in the transaction, and then apportion these equal amounts to each motor finance agreement involved in the transaction.
(8) Where the hybrid remedy applies to a scheme case and the annual percentage rate of charge under an agreement involved in the transaction is less than or equal to the minimal annual percentage rate of charge set out in the table at CONRED 6.4.7R, the lender must assess the amount of redress for that agreement as £0 and include this in the sum in (5)(a)(ii).

Redress set-off against undisputed arrears and defaults

(1) The lender may set-off redress against any undisputed arrears or default sums owed by the consumer to the lender in relation to the motor finance agreement where:
1. (a) an offer is made to the consumer in accordance with CONRED 6.2.7R; or
2. (b) redress is payable under either the commission repayment remedy (CONRED 6.4.4R) or the hybrid remedy (CONRED 6.4.22R).
(2) Where a single motor vehicle sales transaction is financed by more than one motor finance agreement, the lender may-set off redress against one or more of the agreements relating to the transaction where there are undisputed arrears or default sums owed by the consumer under that agreement.

Where the lender sets-off any redress in accordance with CONRED 6.4.24R, the lender must provide the consumer with the relevant details in the provisional redress decision (CONRED 6.4.36R and CONRED 6 Annex 2) and the redress determination where applicable (CONRED 6.4.37R(5) and CONRED 6 Annex 3).

(1) The lender must remove any set-off in the redress determination where the consumer has objected to set-off being applied and the lender has determined that the objection satisfies one or more of the conditions in (2).
(2) The conditions are that the consumer:
1. (a) has provided evidence that they had disputed the arrears or default sums prior to the date of the provisional redress decision and this matter had not been resolved by the lender or by some other means; and/or
2. (b) has demonstrated that if set off is applied, the consumer would not be able to meet their priority debts.
(3) When considering a consumer’s objection to set off being applied, a lender must assess the objection and evidence in support fairly and in good faith.
(4) The lender must respond to the consumer’s objection to set off being applied in accordance with CONRED 6.4.37R.

Redress calculations – approach to evidence and missing information

(1) In order to calculate redress in accordance with CONRED 6.4, the lender must:
1. (a) first, consider information and data contained in primary records of the type set out in CONRED 6 Annex 1.1G(1) and (3); and
2. (b) then, where appropriate, consider whether reasonable assumptions can be made regarding the consumer’s motor finance agreement by relying on contemporaneous records of the type described in CONRED 6 Annex 1.1G(4).
(2) Where the lender does not have the necessary records, it must request these from the relevant credit broker.

Where a credit broker either does not respond to the request for information in CONRED 6.4.27R(2) within 1 month or the credit broker only partially responds, the lender must send a further request as soon as practicable, providing a further 14 days for the credit broker to respond.

A credit broker, where it receives a request for information from a lender under CONRED 6.4.27R(2), must comply with CONRED 6.2.28R.

Where the lender has complied with CONRED 6.4.27R and the relevant information necessary to calculate redress continues to be missing, it must either:

(1) contact the consumer and/or an appropriate third party such as a credit reference agency to provide some or all of the missing information and then rely on the approach to reconstructing missing information in CONRED 6.4.31R where the information has not been obtained; or
(2) rely on the approach to reconstructing missing information in CONRED 6.4.31R, without first taking the steps in (1).

Approach to reconstructing missing information

(1) Where appropriate, the lender must reconstruct missing data using contemporaneous records of the type described in CONRED 6 Annex 1.1G(1), (3) and (4) relating to other consumers.
(2) The other consumers referenced in (1) must have been in the same or sufficiently similar position as the consumer in the scheme case and would have received an annual percentage rate of charge which was the same or sufficiently similar to the annual percentage rate of charge that the consumer in the scheme case received.
(3) The lender’s determination must take into account:
1. (a) the year of the transaction;
2. (b) the type and value of the vehicle purchased, bailed or hired;
3. (c) the amount of credit obtained; and
4. (d) the cost of that credit relative to the value of the vehicle.

Where it is not possible to reconstruct missing information in accordance with CONRED 6.4.31R, the lender must adopt the approach set out in CONRED 6.4.33R for the relevant value.

(1) Where the annual percentage rate of charge is missing, the lender must use:
1. (a) the median of the annual percentage rates of charge under all motor finance agreements entered into by the lender following an introduction effected by the relevant credit broker in the financial year the motor finance agreement was entered into; or
2. (b) where (a) is not available, an annual percentage rate of charge which is the median annual percentage rate of charge under all motor finance agreements from a credit broker to whom the lender offered the same or sufficiently similar terms of engagement or business for the financial year in which the motor finance agreement was entered into.
(2) Where the commission amount is missing, the lender must use:
1. (a) a commission amount which is the median of the commission amounts under all motor finance agreements entered into by the lender following an introduction effected by the relevant credit broker in the financial year the motor finance agreement was entered into; or
2. (b) where (a) is not available, a commission amount which is the median annual commission amount under all motor finance agreements from a credit broker to whom the lender offered the same or sufficiently similar terms of engagement or business for the financial year in which the motor finance agreement was entered into.
(3) Where the total amount of credit is missing, the lender must:
1. (a) adopt a value using a motor valuation guide such as AutoTrader, CAP, Percayso and Glass’s for the relevant motor vehicle and the relevant year, deducting 10% to reflect a typical deposit payment; or
2. (b) where the relevant year is not available in the motor valuation guides in (a):
  1. (i) contact either a relevant third party such as a credit reference agency or take all reasonable steps to contact the consumer to obtain this information; or
  2. (ii) contact both a relevant third party and the consumer where enquiries under (i) have not resulted in the lender obtaining the total amount of credit; and
3. (c) where the lender has not managed to obtain the information as a result of enquiries in (a) or (b), use a motor valuation guide of the type specified in (a) to adopt a value for the relevant motor vehicle based on the closest year the lender can obtain a valuation for at the point at which the consumer entered into the motor finance agreement, deducting 10% to reflect a typical deposit payment.
(4) Where the start date or execution date for the motor finance agreement is missing, the lender must use:
1. (a) the first day of the month in which the lender has evidence of the consumer first making a payment or charges applying under the motor finance agreement; or
2. (b) if there is no evidence of the first payment or initial charges, the day ‘X’ months before the date the last regular payment was due under the agreement, where ‘X’ is the term of the agreement in months; or
3. (c) where it is not possible to determine the start date or execution date in accordance with (a) or (b):
  1. (i) for new motor vehicles, the first day of the time period associated with the vehicle’s registration, namely:
    1. (A) 1 March for vehicles registered between 1 March and 31 August; and
    2. (B) 1 September for vehicles registered between 1 September and the last day of February; or
  2. (ii) for used or second-hand motor vehicles, any information that indicates when the credit broker acquired the motor vehicle, such as date of purchase; or
  3. (iii) where it is not possible to determine the start date or execution date in accordance with (i) or (ii), 48 months prior to the date the last regular payment was due under the agreement.
(5) Where the date the last regular payment was due under the motor finance agreement or the date by which any fee associated with taking ownership must be paid is missing, the later of:
1. (a) the last day of the month in which the lender has evidence of the consumer making a final payment or final charges applying under the agreement; and
2. (b) the day 48 months after the start date or the date the agreement was executed.
(6) Where the actual end date of the motor finance agreement is not available, the lender must use:
1. (a) the last day of the month in which the lender has evidence of the consumer making a final payment or final charges applying under the agreement;
2. (b) if there is no evidence of the final payment or final charges, the day ‘X’ months after the start date or the date the agreement was executed, where ‘X’ is the term of the agreement in months;
3. (c) if it is not possible to determine the end date in accordance with (a) or (b), the day 48 months after the start date or the date the agreement was executed.
(7) Where the lowest rate of interest in the range of interest rates under the discretionary commission arrangement is not available, the lender must adopt:
1. (a) the actual annual percentage rate of charge multiplied by 0.79; or
2. (b) (i) the median of the minimum rates under all motor finance agreements entered into by the lender following an introduction effected by the relevant credit broker in the financial year the motor finance agreement was executed; or
  1. (ii) where (i) is not possible, the median of the minimum rates under all motor finance agreements from a credit broker to whom the lender offered the same or sufficiently similar terms of engagement or business for the financial year in which the motor finance agreement was executed.
(8) Where necessary information to calculate early settlement payment(s) is not available, the lender must assume that the motor finance agreement remained valid for the agreed term, and the lender and consumer fulfilled their obligations under the terms and by the dates specified in that agreement.

Calculation methodology for compensatory interest

(1) This rule sets out how the lender must calculate compensatory interest as part of the commission repayment remedy in CONRED 6.4.4R, the total APR adjustment in CONRED 6.4.14R, the adjusted realised cost of credit cap in CONRED 6.4.20R and the total realised cost of credit cap in CONRED 6.4.21R.
(2) (a) In relation to the commission repayment remedy and the total realised cost of credit cap, the lender must divide the period from the date the consumer entered into the motor finance agreement until the date of redress payment into calendar year segments.
1. (b) In relation to the total APR adjustment calculations and the adjusted realised cost of credit cap, the lender must:
  1. (i) for each payment differential in the schedule in CONRED 6.4.12R and CONRED 6.4.20R(3), identify the date the payment differential occurred and the date of redress payment to create a list of interest periods; and
  2. (ii) divide each interest period in (i) into calendar year segments.
(3) For each calendar year segment, the lender must:
1. (a) identify the compensatory interest rate from the table in CONRED 6.4.35R that applies to that year;
2. (b) calculate the number of days for which that rate applies in that calendar year; and
3. (c) apply the formula in (4).
(4) The formula is:
(* if the calendar year is a leap year, the denominator is 366)
where:
1. (a) the principal is either:
  1. (i) the total amount of commission payable, when calculating interest in relation to the commission repayment remedy; or
  2. (ii) the total realised cost of credit calculated in accordance with CONRED 6.4.21R, when calculating interest in relation to the total realised cost of credit cap; or
  3. (iii) each payment differential set out in the schedule produced in accordance with CONRED 6.4.12R, when calculating interest in relation to the total APR adjustment; or
  4. (iv) each payment differential set out in the schedule produced in accordance with CONRED 6.4.20R(3) when calculating interest in relation to the adjusted realised cost of credit cap; and
2. (b) compensatory interest rate is the rate that applies for that calendar year as set out in the table in CONRED 6.4.35R.
(5) The lender must sum the interest amounts for all calendar year segments to calculate the total compensatory interest.

Table: Compensatory interest rates used in CONRED 6.4.34R for the purposes of calculating redress

Compensatory interest rates 2007–2028
2007	6.51%	2018	3%
2008	5.68%	2019	3%
2009	3%	2020	3%
2010	3%	2021	3%
2011	3%	2022	3%
2012	3%	2023	5.68%
2013	3%	2024	6.11%
2014	3%	2025	5.25%
2015	3%	2026	4.49%
2016	3%	2027	4.4%
2017	3%	2028	4.6%

Fifth step: sending a provisional redress decision and redress determination following redress calculations and paying redress

(1) This rule applies where a lender has:
1. (a) calculated the amount of redress payable to the consumer under CONRED 6.4.4R (the commission repayment remedy) or CONRED 6.4.22R (the hybrid remedy); and
2. (b) where relevant, set-off any undisputed arrears or defaults against that redress amount in accordance with CONRED 6.4.24R.
(2) The lender must send the consumer a provisional redress decision in a durable medium that contains the information in CONRED 6 Annex 2 and includes:
1. (a) the basis for the lender’s determination that there was an unfair relationship that caused loss or damage;
2. (b) the total amount of redress payable to the consumer as an offer in full and final settlement of all claims against the lender within the subject matter of the scheme relating to the agreement;
3. (c) details of the calculations the lender made under CONRED 6.4.3R to CONRED 6.4.34R to determine the total amount of redress, clearly setting out the methodology used, any evidential assumptions and reconstructions relied on, the amount of compensatory interest included in these calculations and any proposed set-off for undisputed arrears or default sums; and
4. (d) that the consumer has 1 month from the date of the provisional redress decision to respond.

Handling a response to the provisional redress decision

(1) This rule applies where a lender has sent a provisional redress decision under CONRED 6.2.7R(1), CONRED 6.4.6R or CONRED 6.4.36R.
(2) Where the consumer responds to the provisional redress decision within 1 month stating that they do not wish to have their case considered under this scheme, the lender must, within a 7-day period beginning on the day the response is received, send the consumer a communication in a durable medium to:
1. (a) acknowledge the response; and
2. (b) explain that the complaint will not be dealt with any further.
(3) Where the consumer responds to the provisional redress decision within 1 month stating that they accept the decision in full and final settlement, the lender must, within a 7-day period beginning on the day the response is received, send the consumer a communication acknowledging the acceptance.
(4) Where a consumer responds to the provisional redress decision within 1 month objecting to the decision, the lender must:
1. (a) send an acknowledgment containing the information in CONRED 6 Annex 10.1R within 7 days, requiring the consumer to provide further details of the objection, including any evidence supporting the objection, within 1 month of the date of the acknowledgement;
2. (b) decide whether it should revise the provisional redress decision and recalculate the amount of redress payable based on the consumer’s objection and any supporting evidence; and
3. (c) undertake one of the actions set out in (5) within 2 months of:
  1. (i) the day it receives the further details of the objection; or
  2. (ii) where it receives no further details within 1 month of the date of the acknowledgement in accordance with (a), the date of the expiry of that 1 month period.
(5) The actions in (4)(c) are to either:
1. (a) send a redress determination containing the information in CONRED 6 Annex 3 that confirms:
  1. (i) that the lender has rejected the consumer’s objection; and
  2. (ii) the total amount of redress payable to the consumer in full and final settlement of all claims within the subject matter of the scheme relating to this case; or
2. (b) send a redress determination containing the information in CONRED 6 Annex 3 that confirms:
  1. (i) the lender’s acceptance of the consumer’s objection; and
  2. (ii) the revision of the provisional redress decision and recalculated total amount of redress payable in full and final settlement of all claims within the subject matter of the scheme relating to this case.
(6) Where the consumer does not respond to the provisional redress decision within 1 month, the lender must send a redress determination confirming the provisional redress decision and containing the information in CONRED 6 Annex 3 within 1 month of the expiry of that period.
(7) Where the consumer responds to the redress determination within a minimum of 6 months stating that they accept the determination in full and final settlement, the lender must, within a 7-day period, beginning on the day the response is received, send the consumer a communication acknowledging the acceptance.
(8) Any communication sent by a lender under this rule must be sent in a durable medium.

Paying redress

(1) Where a lender receives an acceptance of the provisional redress decision sent in accordance with CONRED 6.2.7R(1) or CONRED 6.4.36R or the redress determination sent in accordance with CONRED 6.4.37R(5) or CONRED 6.4.37R(6), it must recalculate the amount of compensatory interest payable as part of the redress calculations to reflect the actual redress payment date.
(2) Where the motor finance agreement is ongoing, and there are no undisputed arrears or default sums, the lender:
1. (a) may provide the consumer with the option of offsetting the amount of redress against any outstanding principal instead of receiving it as a separate payment; and
2. (b) must offset the amount of redress against the outstanding principal where the consumer gives consent to do so.
(3) Within 1 month of receiving acceptance of the provisional redress decision or the redress determination, the lender must pay the amount of redress to the consumer either by bank transfer or in accordance with the consumer’s instructions.

Post redress interest until payment

(1) Simple interest is payable on the amount of redress from the end of the 1-month period referred to in CONRED 6.4.38R(3) until the date of payment of redress, at a rate of 8% per annum.
(2) After the expiry of the 1-month period in CONRED 6.4.38R(3), the amount of redress, including interest, may be recovered as a debt due to the consumer and, in particular, may:
1. (a) if a county court so orders in England and Wales, be recovered by execution issued from the county court (or otherwise) as if it were payable under an order of that court;
2. (b) be enforced in Northern Ireland as a money judgment under the Judgments: Enforcement (Northern Ireland) Order 1981; or
3. (c) be enforced in Scotland by the sheriff, as if it were a judgment or order of the sheriff whether or not the sheriff could themselves have granted such judgment or order.

Exceptional circumstances

(1) Where a lender receives a communication set out in (2) after a deadline specified by this chapter due to exceptional circumstances (taking account of all of the circumstances of the case), the response must be considered under this chapter as if it had been received before that deadline.
(2) The communications referred to in (1) are:
1. (a) a response to a communication sent to a consumer under this chapter; and
2. (b) a complaint the lender would have been required to consider under CONRED 6.2.17(R)(2) had it been received before the end of the 17-month period referred to in that rule.
(3) Where (1) applies, the time limits in this chapter are extended according to the length of delay caused by the customer’s failure to comply with the deadline.

In the FCA’s view, examples of circumstances that are exceptional under CONRED 6.4.40R might include:

(1) the consumer’s incapacitation or other serious ill-health condition or a bereavement during the relevant period; or
(2) where the lender failed to comply with the requirements in this chapter.

Payment of redress by successors

(1) A successor is liable for a portion of the redress, calculated by the lender in accordance with CONRED 6.4.44R.
(2) A successor must promptly pay its portion of the redress to the lender.

(1) CONRED 6.4.42R(2) clarifies how a successor discharges its portion of the liability, but this is without prejudice to any rights of indemnity or contribution a successor may have against a lender under the contractual arrangements between them or pursuant to the Civil Liability (Contribution) Act 1978.
(2) The obligation on a successor to pay the lender promptly under CONRED 6.4.42R(2) is to allow the lender to make a single payment to the consumer for the full redress amount and within the timeframes required by the scheme.
(3) CONRED 6.4.42R(2) does not allow for multiple payments to a consumer. A lender is responsible under CONRED 6.4.38R(3) for making a single payment of redress to consumers within the timeframes required by the scheme, including when there is a successor.

(1) For all scheme cases where the lender has identified a successor, the lender must calculate the successor’s liability using the successor liability formula.
(2) The successor liability formula is:
S = (R / T) x D
where:
1. (a) S = successor’s liability;
2. (b) R = redress payable to a consumer;
3. (c) T = term of the relevant loan represented in days; and
4. (d) D = number of days for which the successor holds the loan.
(3) The reference in CONRED 6.4.44R(2) to the successor holding the loan is to be read as meaning the period beginning on the day the person became a successor of the relevant motor finance agreement and, if relevant, ending the day before another person became a successor of the same motor finance agreement.