Building next-generation remediation operations: A roadmap for action

Chris Allen, Cognizant’s Head of Retail Banking Consulting in the UK and Ireland, Graham McConney, AI Advisor and Talha Ghafoor, Senior Director UK and Ireland, explore how financial institutions can leverage cutting-edge AI and data management solutions to tackle the motor finance remediation crisis efficiently while restoring trust and ensuring compliance with FCA deadlines.  

The motor finance industry is in the midst of an unprecedented remediation crisis. Discretionary Commission Arrangements (DCAs), where brokers added undisclosed interest to loans in exchange for commissions, were declared unlawful by the Court of Appeal in October 2024. 

The Financial Conduct Authority (FCA) has mandated that firms resolve all DCA-related complaints by December 2025. Mishandling these claims risks severe regulatory penalties, reputational damage, and operational strain. However, financial institutions now have access to technologies that can revolutionise remediation. By using AI-driven solutions, they can ensure compliance while transforming their operations to meet future regulatory challenges more effectively.  

Financial institutions need a structured plan to handle the motor finance crisis efficiently. Cognizant recommends the following roadmap, which combines advanced data handling, AI tools, and streamlined operations.  
 

1. Review of agreements

The first step is to gather and analyse historical agreements, many of which date back to 2007. This is a crucial yet challenging process, as much of this data is fragmented across legacy systems, paper archives, and unstructured formats like PDFs.

AI-driven solutions like Generative AI can automate extracting and validating key data points, including vehicle & driver details, loan values and interest rates. By consolidating this information, institutions can create a complete and accurate dataset, laying the groundwork for effective remediation.  
 

2. Data asset creation

Once agreements are reviewed, the next step is to build a centralised "data asset". This repository integrates extracted data into a standardised format, allowing seamless workflows for redress calculations, customer communications, and compliance reporting.  

AI enables this process to occur at scale, ensuring that even vast amounts of unstructured data can be organised efficiently. This consolidated view also helps institutions identify trends in their exposure, improving both prioritisation and decision-making.  
 

3. Liability insights and redress calculations  

With a robust data asset in place, financial institutions can leverage AI to calculate liabilities and determine redress amounts quickly and accurately. Unlike manual methods prone to inconsistencies, AI ensures transparency and compliance with FCA guidelines.  

AI tools can also identify systemic patterns of overcharging, helping institutions to address broader issues while providing fair compensation to customers. By automating these calculations, banks can drastically reduce processing times and minimise the risk of errors.  
 

4. Multi-channel email and voice call management 

Effective communication is essential to restoring trust. AI-powered platforms can streamline interactions across email, phone calls, web portals, and apps, ensuring consistent messaging tailored to individual customers.  

For instance, AI can analyse voice calls for sentiment and intent, helping institutions prioritise urgent cases. At the same time, automated email responses can provide timely updates, reducing frustration and improving customer satisfaction.  
 

5. Full inbound management 

It is vital to manage the influx of complaints. AI systems can triage and categorise claims, directing them to the appropriate workflows based on complexity and urgency. This ensures that high-priority cases are handled promptly while routine tasks are resolved efficiently.  

By automating these processes, institutions can handle fluctuating complaint volumes without hiring large temporary workforces, reducing costs and operational strain.  
 

6. Operational visibility and statutory reporting 

Transparency is a cornerstone of FCA compliance. Modern remediation systems provide real-time visibility into the status of every claim, creating a detailed audit trail.  

This operational insight also supports statutory reporting, enabling institutions to meet regulatory requirements while reducing the administrative burden on teams.  
 

7. Achieving operational excellence 

The final step is embedding scalability and resilience into remediation operations. By combining AI with human oversight, institutions can handle complex cases while automating routine tasks. This hybrid model ensures both speed and accuracy, enabling institutions to meet deadlines and exceed customer expectations.

Need for speed

Delaying the implementation of modern remediation processes could lead to serious consequences across three critical areas: regulatory compliance, operational capability, and consumer trust.  

Non-compliance with the FCA's Consumer Duty regulations poses an immediate threat. These rules require that institutions treat customers fairly, communicate transparently, and resolve complaints promptly. Failure to meet these expectations could result in substantial penalties, including financial fines and reputational harm. The FCA has been clear that the use of AI and other advanced technologies must align with principles of fairness and consumer benefit.

Operationally, the sheer scale of the motor finance remediation challenge is unprecedented. Without scalable solutions, institutions will struggle to manage the likely influx of complaints, leading to bottlenecks, inefficiencies, and the need for costly temporary staff. This operational strain risks prolonging resolution times and increasing errors, further frustrating customers and damaging the institution's ability to respond effectively.  

Trust is also at risk. Consumer confidence in financial institutions is already fragile, and mishandling complaints will only exacerbate this issue. To rebuild trust, institutions must demonstrate fairness, transparency, and responsiveness in their remediation efforts.  
 

How Cognizant can help  

Cognizant brings a wealth of expertise in AI-driven remediation and financial services to help institutions meet the demands of motor finance remediation. By combining advanced technology with regulatory insight, Cognizant offers solutions that transform the remediation process into a seamless, efficient, and compliant operation.  

At the heart of Cognizant's approach is AI-powered data processing. This technology automates extracting and validating data points, consolidating information from disparate systems into a single, accurate data asset. This foundational step eliminates the inefficiencies of manual data handling, enabling institutions to process complaints faster and with greater accuracy.  

Cognizant also leverages advanced analytics to streamline redress management. By using AI tools to calculate compensation amounts, institutions can ensure consistency, transparency, and compliance with FCA guidelines. AI accelerates this process and identifies complaint patterns, providing valuable insights for future regulatory strategies.  

Customer communication is another area where Cognizant delivers transformative value. Our multi-channel communication platforms use AI to generate personalised, real-time responses, enhancing customer satisfaction while reducing the burden on human agents.  

Regulatory compliance is integral to Cognizant's solutions. By providing clear audit trails and real-time reporting, we ensure institutions meet FCA requirements while safeguarding sensitive customer data. This focus on compliance gives financial institutions the confidence to navigate complex regulatory landscapes without fear of penalties or reputational harm.  

Additionally, scalability is central to Cognizant's approach. By combining AI capabilities with human oversight, our solutions handle large complaint volumes efficiently while reserving human intervention for complex or sensitive cases. This hybrid model ensures precision and operational flexibility, reducing costs and freeing up resources for core business functions.  

Cognizant's proven track record in delivering these solutions underscores our ability to help financial institutions turn the motor finance remediation challenge into an opportunity for transformation. By partnering with Cognizant, organisations can resolve complaints efficiently, restore consumer trust, and build a scalable infrastructure for the future of financial services. 
 

Building for the future  

Ultimately, the motor finance crisis is an opportunity for financial institutions to modernise their operations and set a new standard for customer service. By adopting AI-powered solutions, organisations can create scalable, resilient systems capable of handling future disruptions. These technologies will reduce costs, improve compliance, and enhance customer satisfaction, positioning financial institutions as trusted partners in their customers' financial journeys.  

Don't let this challenge define your organisation. Contact Cognizant today to learn how we can help you build next-generation remediation operations that deliver both immediate results and long-term value.