Extension follows Court of Appeal ruling on undisclosed commissions
The Financial Conduct Authority (FCA) has announced an extension for firms to respond to complaints involving motor finance agreements not tied to discretionary commission arrangements (DCAs).
Firms now have until December 4, 2025 to provide final responses to such complaints, aligning with an earlier extension granted for complaints related to DCAs.
The decision follows a Court of Appeal judgment on October 25, 2024, which ruled that car dealers unlawfully accepted commissions from lenders without disclosing this to customers or obtaining their informed consent. The judgment, which focused on common law, equitable principles, and the Consumer Credit Act rather than FCA rules, is expected to generate a high volume of consumer complaints.
“On December 11, 2024, the Supreme Court confirmed it would hear an appeal against the Court of Appeal’s judgment,” the FCA said in a statement. “We previously wrote to the Court 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 of the Court of Appeal decision, our expectations and some good and poor practice examples.”
The extension also applies to motor leasing agreements, even though the Court of Appeal judgment did not specifically address these. The regulator stated it is crucial to ensure consistent treatment for consumers using similar products.
The FCA’s ongoing review of historical motor finance DCAs, launched in January 2024, aims to determine whether widespread misconduct occurred before a 2021 ban on DCA practices. It is assessing whether consumers have been harmed and how compensation can be distributed in a fair and efficient manner.
The regulator plans to provide an update on both DCA-related and non-DCA complaints by May 2025. However, the timing and substance of this update will depend on the progress of the Supreme Court appeal, according to the FCA, which indicated that it would end the complaint handling extension earlier if feasible.
“Motor finance is an important market, serving over two million consumers a year,” the FCA stated. “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.”
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