The proposals are expected to be published within two weeks and, if taken forward, would mean the complaint extension is in place by mid-December 2024.
The regulator had already extended the final date to December 2025, but it now says it plans to consult on putting a further extension in place for firms to respond to complaints and for consumers to refer issues to the Financial Ombudsman Service (FOS).
Court of appeal cases
The FCA’s decision to consult on the deadline 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.
Since the judgment, the FCA has undertaken extensive industry engagement, joined an industry and Government discussion, convened its own industry roundtable and spoken with 63 firms.
The regulator said motor finance firms are likely to receive a high volume of complaints in response to the recent Court of Appeal judgment. Any complaint extension would allow them time to consider how these might be efficiently and effectively handled. It said this would help prevent “disorderly, inconsistent and inefficient outcomes” for consumers making complaints.
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In Hopcraft, Johnson and Wrench, the Court of Appeal decided it was unlawful for the car dealers to receive a commission from the lender providing motor finance without obtaining the customer’s informed consent to the payment.
This required the consumer to be told all material facts, including the amount of the commission and how it was to be calculated.
The judgment related to fixed commission in motor finance agreements as well as discretionary commission arrangements (DCAs), which were banned by the FCA in 2021.
The two lenders involved in the cases intend to appeal. The proposed complaint extension will cover at least the period until the Supreme Court decides whether to grant permission to appeal.
The FCA said 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.
Customers who believe they have cause to complain about commission arrangements should make them as normal.
Motor finance probe
In January 2021, the FCA banned car finance lenders from making DCAs with brokers for hire purchase (HP) or personal contract purchase (PCP) deals.
Since 6 February, two million drivers have complained to car finance lenders using a free car finance reclaim tool from Money Saving Expert, and those who haven’t have been urged to do so.
On 11 January 2024, the FCA announced a review into whether motor finance customers have been overcharged because of the past use of DCAs.
The review seeks to understand if there was widespread misconduct related to DCAs before the 2021 ban, if consumers have lost out and, if so, the best way to make sure any compensation owed is received in an appropriate settlement in an orderly, consistent and efficient way.
