The Financial Conduct Authority (FCA) is consulting on proposals to extend the deadline for firms to respond to motor finance complaints involving non-discretionary commission arrangements.
This follows the Court of Appeal’s 25 October ruling in Hopcraft v Close Brothers Ltd, Johnson v FirstRand Bank Ltd, and Wrench v FirstRand Bank Ltd, which found it unlawful for car dealers to receive undisclosed commissions from lenders. The Court determined that borrowers must be informed of all material facts, including the commission amount and calculation method, before entering agreements.
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The FCA previously extended response deadlines for complaints linked to discretionary commission arrangements (DCAs), which it banned in 2021. The new consultation addresses fixed commission agreements, also implicated in the recent judgment.
Handling complaints amid potential appeals
The Court of Appeal’s decision is expected to prompt a surge in complaints from affected customers. In response, the FCA is proposing two options for extending complaint-handling deadlines:
- Until 31 May 2025, allowing time to determine whether the Supreme Court will hear the appeal.
- Until 4 December 2025, aligning with current rules for handling DCA-related complaints.
FCA Chief Executive Nikhil Rathi emphasised the importance of orderly resolutions:
“The Court of Appeal’s ruling means many customers who bought a car using dealer-arranged finance could be owed compensation. We want to ensure they receive it efficiently while maintaining a competitive motor finance market.”
Industry response
Stephen Haddrill, Director General of the Finance & Leasing Association (FLA), welcomed the proposals: “This is a sensible move… but restoring certainty will require an expedited path to the Supreme Court and a stay on claims in lower courts.”
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By GlobalDataAdrian Dally, the FLA’s Director of Motor Finance & Strategy, also supported the extension: “This is practical help for the industry as we await the Supreme Court’s ruling.”
The FCA is also consulting on extending the time for consumers to refer non-DCA motor finance complaints to the Financial Ombudsman Service.
