FCA extends deadline for motor finance complaints

The Financial Conduct Authority (FCA) has announced an extension for firms to respond to complaints about motor finance agreements not involving discretionary commission arrangements (DCAs). Firms now have until December 4, 2025, to provide final responses to these complaints, aligning the timeline with previous extensions granted for DCA-related cases.

This decision follows the October 25th Court of Appeal judgment that found it unlawful for car dealers to receive commissions from motor finance lenders without disclosing the arrangement and obtaining informed customer consent. The judgment emphasised principles of common law, equity, and the Consumer Credit Act, rather than FCA-specific regulations.

Preventing disorderly outcomes

The FCA’s extension is designed to mitigate the risk of “disorderly, inconsistent and inefficient outcomes for consumers and firms”. This approach acknowledges the high volume of complaints anticipated in the wake of the Court of Appeal’s decision.

“We welcome the extension of the pause to non-DCA complaints as we await the outcome of the Supreme Court hearing,” said Stephen Haddrill, Director General of the Finance & Leasing Association.

Supreme Court appeal pending

On December 11, 2024, the Supreme Court confirmed it would hear an appeal against the Court of Appeal’s judgment. While awaiting the decision, the FCA has urged firms to comply with existing legal standards for motor finance agreements.

To assist firms, the FCA has published a summary of the Court of Appeal decision, outlined expectations, and shared examples of good and poor practices.

Enhanced consumer protections

Consumers concerned about undisclosed commissions and potential overpayments are encouraged to lodge complaints. The FCA has also extended the window for consumers to refer non-DCA complaints to the Financial Ombudsman Service, giving them until July 29, 2026, or 15 months from the date of the firm’s final response, whichever is later.

In response to feedback, the FCA confirmed that the complaint handling extension will cover motor leasing agreements, ensuring consistent treatment across similar products.

DCA review and next steps

The FCA is conducting a review into historical discretionary commission arrangements in motor finance to assess the extent of potential misconduct before the 2021 ban and to determine appropriate compensation mechanisms.

The extension until December 2025 accommodates the additional time needed to gather data and consider court decisions, including the judicial review by Barclays Partner Finance and the recent Court of Appeal judgment.

The FCA plans to release an update on the DCA review and non-DCA commission complaints in May 2025, depending on the progress of the Supreme Court appeal. If feasible, the complaint-handling extension could be shortened.