FCA seeks feedback on extending auto finance complaints deadline

The Financial Conduct Authority (FCA) is planning to extend the time firms have to handle complaints relating to motor finance commission to either 31 May 2025, or 4 December 2025, and has launched a consultation on the two options.

The regulator previously extended the time firms have to respond to motor finance complaints involving a discretionary commission arrangement (DCA). The latest proposals relate to extending the time firms have to respond to motor finance complaints where a non-discretionary commission arrangement was involved.

The proposed extension would allow firms more time to handle complaints efficiently and effectively and help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms.

Court of Appeal

The move follows the Court of Appeal’s 25 October judgment in Hopcraft v Close Brothers Ltd, Johnson v FirstRand Bank Ltd, and Wrench v FirstRand Bank Ltd.

In these cases, the Court decided it was unlawful for the car dealers to receive a commission from lenders providing motor finance without first telling the customer about the commission and getting their informed consent to the payment.

To obtain informed consent, the borrowers would have to have been told all material facts that might have affected their decision to enter into the agreements, which, in these cases, included how much the commission would be and how it was to be calculated. The judgment related to fixed commission motor finance agreements as well as DCAs, which the FCA banned in 2021. The two lenders involved in the cases (FirstRand trading as MotoNovo and Close Brothers) intend to appeal.

Deadline changes

The FCA said extending the deadline for cases involving a non-DCA agreement until 31 May 2025 would reflect how long it may take to hear whether the Supreme Court has granted permission to appeal.

The FCA plans to set out its next steps on DCA complaints in May 2025. Subject to the outcome of any Supreme Court application, the FCA would update on motor finance non-DCA commission complaints at the same time.

Alternatively, a longer extension until 4 December 2025, would align with the current rules for motor finance firms dealing with DCA complaints.  The FCA extended this date from the original deadline of September this year, because the regulator wanted to be able to reference both the Court of Appeal finding, and also that of the Barclays’ judicial review, which is still pending.

The deadline for responses to the FCA consultation is 5 December.

“We want to make sure that consumers who are owed money get it in an orderly way, and that the motor finance market continues to provide competitive deals for the millions of people that rely on it.”

“This is a welcome move, practical help for the industry in the interim as we wait for a Supreme Court ruling.”

The FCA is also consulting on giving consumers more time to refer motor finance commission complaints not involving a DCA to the Financial Ombudsman Service.

The FCA has said it will write to the Supreme Court asking it to decide quickly whether it will give permission to appeal and, if it does, to consider it as soon as possible, given the potential impact of any judgment on the market and the consumers who rely on it. If permission to appeal is granted, the FCA will consider intervening to share its expertise to assist the Court.

“This is our most popular event ever, and it’s not hard to see why as there is so much happening in the auto and asset finance market currently. Those coming to the conference have the chance to put their questions directly to senior industry figures, including Stephen Haddrill, FLA director general, and Jim Higginbotham, NACFB CEO, as well as legal experts from our partner Shoosmiths.”

For more details and to book your place visit the AFC conference website or email Louise Clavey at louiseclavey@assetfinanceconnect.com