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FCA extends response time for motor finance complaints

Published 19/12/2024, 07:08

LONDON - The Financial Conduct Authority (FCA) has granted motor finance firms until December 4, 2025, to address complaints regarding non-discretionary commission arrangements (non-DCA). This move aligns with an earlier extension for discretionary commission arrangement (DCA) complaints and follows a Court of Appeal judgment on October 25, 2024, which ruled that car dealers must disclose any commission received from lenders and obtain informed consent from customers.

The decision by the Court of Appeal emphasized common law, equitable principles, and the Consumer Credit Act. The FCA's extension aims to help firms manage an anticipated surge in complaints and to ensure consistent and efficient consumer outcomes without causing market disruption.

On December 11, 2024, the Supreme Court confirmed it would hear an appeal against the Court of Appeal's decision. The FCA has expressed its intention to intervene in the case to provide expert assistance. Despite the pending appeal, firms must still comply with current legal requirements when arranging new motor finance agreements. The FCA has provided guidance, including good and poor practice examples, to support firms in this process.

Consumers who suspect they were not informed about commission fees have the right to file a complaint. The FCA has extended the period for consumers to refer non-DCA complaints to the Financial Ombudsman to the later of July 29, 2026, or 15 months from the date they receive a final response from the firm.

The FCA's consultation feedback has led to the inclusion of motor leasing in the extended complaint handling timeframe, ensuring equitable treatment for consumers using similar financing products.

Additionally, the FCA is conducting a review of historical DCA practices in motor finance to determine the extent of misconduct prior to the 2021 ban and to establish an appropriate compensation framework. An update on this review and non-DCA commission complaints is expected in May 2025. However, the FCA notes that the outcome and timing of the Supreme Court appeal may influence what can be communicated at that time.

The FCA acknowledges the significance of the motor finance market, which serves over 2 million consumers annually, and is committed to ensuring fair compensation for affected consumers while maintaining market integrity and competition.

This article is based on a press release statement from the Financial Conduct Authority.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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