On 3 December 2025, the Financial Conduct Authority (FCA) published Policy Statement 25/18 (PS25/18) entitled ‘Changes to handling rules for motor finance complaints’.

Background

Following the Supreme Court judgment in the Hopcraft, Wrench and Johnson case earlier this year, the FCA has been consulting on a redress scheme (CP25/27) for motor finance consumers who were treated unfairly as a result of certain arrangements not having been disclosed to them. The consultation closes on 12 December 2025.

As part of the redress proposals, the FCA also consulted on changes to the rules for handling motor finance complaints. This part of the consultation closed on 4 November 2025 so as to allow time for the FCA to decide on the approach and notify firms before 4 December 2025 when the complaints handling pause they had previously implemented was due to expire. The FCA’s PS25/18 reflects the outcome of that exercise. 

Summary

The PS25/18 policy statement has confirmed that, with regards to complaints handling:

  • for complaints concerning any motor finance regulated credit agreement with a commission arrangement (including DCAs and non-DCAs), the complaints handling pause is extended to 31 May 2026;
  • motor leasing complaints are excluded from this extension, meaning that, from 5 December 2025, firms need to recommence the process of sending final responses to them in line with the Dispute Resolution: Complaints (DISP) rules;
  • firms must update their public facing communications to reflect the changes to the time limits;
  • for final responses sent after 29 January 2026, consumers will have the normal 6 month period to refer a complaint to the Financial Ombudsman Service;
  • record keeping and retention requirements are extended to April 2031.

Alongside PS25/18 the FCA published a Dear CEO letter, in relation to progressing complaints and the next action it expects firms to take, and a statement on the lifting of the pause on motor finance complaints (i.e. not leasing complaints) handling from 31 May 2026.

Having originally consulted on extending the pause to 31 July 2026, the selection of the earlier date of 31 May 2026 reflects the FCA’s commitment to delivering redress expeditiously. For firms, it means that there will be a shorter time to digest the FCA’s final position on how redress should be applied before having to apply it in response to complaints.

Next steps for firms

After the CP25/27 consultation period closes in relation to the rest of the proposals on 12 December 2025, the FCA expects to announce in February or March 2026 whether it will go ahead with the redress scheme.

If the FCA publishes redress scheme rules in February/ March 2026, it will:

  • consider the interaction of these rules with the pause to avoid responses having to be sent for complaints within scope of the scheme; and
  • set out how firms should respond to complaints with both scheme and non-scheme elements (recognising it may be clearer for consumers to receive a final response at the same time).

For motor finance complaints included in the extended pause to 31 May 2026, firms should consider:

  • investigating: as set out in the October 2025 Dear CEO Letter, complaints within the pause still need to be investigated and progressed so that firms are ready to start issuing final responses if they are not covered by any redress scheme. Firms should prepare how they intend to handle and determine these complaints in accordance with the 8-week complaint handling requirements;
  • categorising: it may be useful to categorise complaints which may be impacted by the FCA’s redress scheme in different ways such as those within scope of the pause but which are likely to be outside scope of the redress scheme (for which the pause may be lifted earlier than 31 May 2026) and those which contain both scheme and non-scheme elements;
  • record keeping: firms will have to retain and preserve relevant records until 11 April 2031 and will need appropriate systems and controls in place for this.

For motor leasing complaints not included in the extended pause and subject to the normal DISP rules from 5 December 2025, firms should resume handling these bearing in mind the relevant timeframes for doing so:

  • for complaints received between 26 October 2024 and 19 December 2024, the clock that was stopped on 19 December 2024 starts again. In other words, if a complaint was received 3 weeks before the extension started on 19 December 2024, the firm would have 5 weeks from 5 December 2025 to send a final response;
  • for complaints received on or after 5 December 2025, a final response should be sent within 8 weeks of the date it was received (i.e. within the normal period set in our complaint handling rules in DISP 1.6.2R). If, by the end of 8 weeks, the firm is not in a position to send a final response, it must explain this in writing in accordance with DISP 1.6.2R(2), indicating when it expects to be able to do so and inform the complainant that they may now refer the complaint to the Financial Ombudsman. However, guidance in DISP 1.6.7G explains that the FCA expects firms to issue a final response that addresses almost all complaints within 8 weeks of receiving them.

The FCA notes that some complaints about leasing agreements have already been referred to the Financial Ombudsman and states that it will work closely with the Financial Ombudsman to ensure a consistent and complementary approach to handling these complaints.