The extension will help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms.
We have extended the time firms have to respond to complaints[2] about motor finance agreements not involving a discretionary commission arrangement (DCA). Firms now have until after 4 December 2025 to provide a final response to non-DCAs, in line with the extension we have already provided for complaints involving DCAs.
The extension follows the judgment of the Court of Appeal[3] on 25 October 2024 in 3 motor finance cases. In that case, the Court decided it was unlawful for the car dealers to receive a commission from lenders providing motor finance without first telling the customer about the commission and getting their informed consent to the payment. The focus of the Court of Appeal decision was common law, equitable principles and the Consumer Credit Act, rather than FCA rules.
Firms who provide motor finance are likely to receive a high volume of complaints in response to the judgment. We have extended the time firms have to handle complaints to help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms.
On 11 December 2024, the Supreme Court confirmed it would hear an appeal[4] against the Court of Appeal’s judgment. We previously wrote to the Court[5] asking it to decide quickly whether it will give permission to appeal and, if it does, to determine the substantive appeal as soon as possible. We plan to apply to formally intervene in the case to share our expertise to assist the Court.
While the Supreme Court will hear an appeal, firms must still comply with the law as it stands when arranging new motor finance agreements. To assist firms, we have set out a summary[6] of the Court of Appeal decision, our expectations and some good and poor practice examples.
Making a complaint
Any consumers concerned that they weren’t told about commission and may have paid too much for their car finance, should complain[7].
We have also confirmed that consumers will have until the later of 29 July 2026 or 15 months from the date of their final response letter from the firm, to refer a non-DCA complaint to the Financial Ombudsman (instead of the usual 6 months).
Following feedback received during our consultation, we have confirmed the complaint handling extension will cover motor leasing, as well as motor finance credit agreements. The Court of Appeal’s judgment did not involve motor leasing agreements. However, consumers also use leasing to access motor vehicles, and it is important that consumers using similar products for similar purposes are treated in the same way.
FCA review into historical DCAs in motor finance
In January this year, we launched a review[8] of historical motor finance 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 appropriate compensation is paid in an orderly, consistent and efficient way.
Alongside the review, motor finance firms were given more time to provide final responses to complaints about motor finance where a DCA was involved, and consumers more time to refer their complaints to the Financial Ombudsman. This was to prevent disorderly, inconsistent and inefficient outcomes for consumers and knock-on effects on firms and the market while we reviewed the issue and determined the best way forward.
In September, we further extended this[9] until 4 December 2025. This was because it had taken longer than expected to get the data needed for the review. Before deciding our next steps, we also wanted to take account of relevant court decisions. These included the judicial review[10] by Barclays Partner Finance of a Financial Ombudsman decision relating to a DCA in a motor finance agreement and the recent Court of Appeal judgment.
We plan to set out next steps in our review of DCAs in May 2025. We hope to also provide an update on motor finance non-DCA commission complaints at the same time. However, given the Court of Appeal’s judgment affects both types of complaint, what we can say in May will depend on the progress of the appeal to the Supreme Court and the timing and nature of any decision. If we can end the complaint handling extension sooner than December 2025, we will.
Motor finance is an important market, serving over 2 million consumers a year. In deciding next steps, we’ll consider how to make sure affected consumers are appropriately compensated and the market continues to work well, with effective competition.