Car finance: FCA to extend complaints deadline
The Financial Conduct Authority (FCA) is to ask the Supreme Court to make a quick decision on whether it will hear the appeal against the recent decision on car finance mis-selling.
The FCA’s announcement yesterday indicates that it will be widening its action over discretionary commission arrangements (DCAs) to encompass fixed commissions too, opening up far more potential claims from borrowers.
Last month’s Court of Appeal ruling found it unlawful for car dealers, acting as brokers, to receive a commission from the lender providing motor finance without obtaining the customer’s informed consent; it applied to both types of commissions. The industry reacted with alarm.
The FCA said yesterday that it would shortly consult on extending the time firms have to respond to consumer complaints about motor finance where a non-discretionary commission was involved and for consumers to refer them to the Financial Ombudsman Service, as it already has with DCAs.
The regulator said it has undertaken “extensive industry engagement” since the ruling, joining an industry and government discussion, convening its own industry roundtable, and speaking with 63 firms, as well as consumer representatives.
“Motor finance firms are likely to receive a high volume of complaints in response to the recent Court of Appeal judgment,” it said.
“Any complaint extension would allow them time to consider how these might be efficiently and effectively handled. This would help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market.”
The FCA said it would 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 was granted, the FCA said, it would consider intervening.
The announcement went on: “Motor finance firms will need to use the time provided to ensure they have the resources to issue final responses to complaints at the end of a proposed extension.
“Motor finance firms are also likely to need to consider whether they should make any financial provisions as complaints need to be handled in line with the law.
“Customers who believe they have cause to complain about commission arrangements should make them as normal.”
In January this year, the FCA launched a review of historical motor finance DCAs across several firms (it banned DCAs in 2021).
It also gave motor finance firms more time to provide final responses to complaints about DCAs, and consumers more time to refer their complaints to the ombudsman, a deadline recently extended to 4 December 2025.
It said yesterday: “The FCA is considering what impact the Court of Appeal’s judgment has on the review into historical DCAs in motor finance, including for both its timeline and scope. This will inevitably be heavily influenced by any decision of the Supreme Court to hear an appeal and, should it do so, its timelines.”
Cheshire law firm Bott & Co, which represented one of the successful claimants, Marcus Johnson, at the county court stage of his claim, described the ruling as “a critical step forward for claimants”.
Solicitor Coby Benson said: “We’re pleased that the FCA and the courts are taking decisive steps to address the longstanding lack of transparency in the car finance industry.
“Extending the timeframe for complaints and broadening eligibility for both fixed and discretionary commission cases is a crucial move that will give even more consumers the chance to seek the redress they rightly deserve.”
Mr Benson said it has secured an average of £1,600 in compensation in litigated mis-sold car finance claims since 2022, winning over 90% of cases.
Alex Neill, co-founder of consumer rights group Consumer Voice, described the announcement as “big news for consumers as it could mean significantly more money is owed to more people”.
She said: “Anyone who has already been told by their finance provider they didn’t have discretionary commission on their loan should now be asking if any commission at all was applied. If it was, they may be owed compensation.”
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