FOS reports hike in CMC motor finance claims

The Financial Services Ombudsman (FOS) has seen a jump in complaints about financial products, which have increased by 70% in the past 12 months, as well as a hike in the number of complaints brought by professional representatives, most notably relating to motor finance.

The quarterly statistics show over 90% of motor finance commission complaints came from third parties rather than directly from consumers.

This suggests claims management companies (CMCs) remain very active in this area following the launch of the Financial Conduct Authority (FCA) review of discretionary commission arrangements at the beginning of this year.

According to FOS data, between April and June it opened 74,645 cases compared to the 43,953 complaints reported in the same period in 2023/24.

In the hire purchase (motor) category, complaints quadrupled from 3,678 reported in Q1 2024/24 to 15,925 in Q1 2024/25. Of these, around three quarters were about motor finance commission.

CMCs

Overall, professional representatives now account for around half of the complaints received, compared to just 17% in the first three months of 2023/24.

FOS cautions that using a professional representative does not necessarily lead to a more favourable outcome – just 25% of claims brought by professional representatives were upheld, compared to 40% of those brought directly by consumers.

Abby Thomas, FOS chief Executive and chief ombudsman, said: “Whilst professional representatives have an important role to play, they must ensure that their cases are well evidenced and have merit.”

FOS has been consulting on a proposed case fee for professional representatives, aiming to make the fee model fairer by bringing CMC fees in line with those paid by lenders, and says an update on these proposals will be provided in the coming months.

Catch up on AFC’s summer conference in-depth sessions looking at CMCs and SME lending, and the impact of the FCA’s intervention in auto finance.