On 21 November 2024, the Financial Conduct Authority (FCA) launched a consultation, CP24/22, on its proposal to make further temporary changes to how firms handle motor finance complaints where they involve a commission arrangement.

Background

In January 2024, the FCA introduced new rules for handling motor finance complaints where there was a discretionary commission arrangement (DCA) between the lender and the broker of the loan. Under the new rules, motor finance firms were given more time to respond to these complaints.

In a recent judgment on motor finance commission, the Court of Appeal decided it was against the law for the dealers involved 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 FCA warns that the judgment could affect complaints relating to all motor finance agreements where commission arrangements are in place, and that it anticipates an increase in complaints about commission arrangements following the judgment.

The FCA’s proposals

In response to this, the FCA is consulting on similar complaint handling rules for complaints relating to motor finance agreements where there was a commission arrangement other than a DCA. The proposed extension is intended to allow firms more time to handle complaints efficiently and effectively and help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms.

The FCA is consulting on two potential options for extending the time firms have to provide final responses to motor finance complaints involving a non-DCA:

• Extending until 31 May 2025, to reflect how long it may take to hear whether an appeal will be granted following the Court of Appeal decision. The FCA plans to set out its next steps on DCA complaints in May 2025, and subject to the outcome of any appeal application it would update the motor finance non-DCA commission complaints at the same time.
• A longer extension until 4 December 2025, to align with the current rules for motor finance firms dealing with discretionary commission complaints.

Next steps

The deadline for responses to CP24/22 is 5 December 2024.

Subject to considering consultation responses, the FCA is aiming to publish its policy statement on 19 December 2024, although it notes that this date may change.