CP24/22: Further temporary changes to handling rules for motor finance complaints

Read CP24/22 (PDF)[1]

Why we are consulting

Earlier this year, we introduced new rules for handling motor finance complaints[2] where there was a discretionary commission arrangement (DCA) between the lender and the broker of the loan. The new rules extended the time motor finance firms had to respond to these complaints. 

Following a recent judgment by the Court of Appeal on motor finance commission, we are consulting on similar rules for complaints about motor finance agreements where there was a commission arrangement other than a DCA.

Who this is for

Our proposed rules will apply to:

• Consumers who have taken out motor finance agreements involving commission arrangements.
• Motor finance providers.
• Motor finance credit brokers, including motor dealers.
• Professional representatives bringing complaints about commission to motor finance providers and credit brokers, including claims management companies (CMCs) regulated by the FCA.

This consultation paper will also interest consumer organisations and trade bodies representing the motor finance and professional representative sectors.

Next steps

Online response form[3]

You can respond to the consultation by using the online response form[3], emailing [email protected], or in writing to:

Redress Policy Team  
Financial Conduct Authority  
12 Endeavour Square  
London E20 1JN

Please respond to the questions in Annex 1 by 5 December 2024.

We will consider all feedback and we hope to publish our policy statement by 19 December 2024. 

Background

In PS24/1[2] we set out new rules that gave motor finance providers more time to respond to complaints about DCAs and consumers more time to refer complaints to the Financial Ombudsman.

We made these rules in response to an anticipated significant increase in complaints in the motor finance market while we carried out our review of firms’ historical use of DCAs.

Under these rules, motor finance firms have longer to respond to complaints about agreements where a DCA was in place. 

The Court of Appeal recently ruled on 3 cases involving car finance. In these cases, the Court decided it was against the law for the dealers to receive a commission from lenders providing motor finance without first telling the customer details about the commission and getting their informed consent to the payment.

The judgment could affect complaints relating to all motor finance agreements where commission arrangements are in place. We anticipate an increase in complaints about commission arrangements following the judgment.

In response, we are consulting on similar complaint handling rules for complaints about motor finance agreements where there was a commission arrangement other than a DCA.