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

Consultation opened
21/11/2024
Consultation closed
05/12/2024
05/12/2024

We are consulting on our proposal to make further temporary changes to how firms handle motor finance complaints where they involve a commission arrangement.

Read CP24/22 (PDF)

Why we are consulting

Earlier this year, we 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. 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

This consultation has now closed. We will publish feedback on responses and issue a Policy Statement once we have reviewed your comments.

Background

In PS24/1 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.