Motor finance: City watchdog considers deadline extension
The City watchdog is considering giving lenders more time to respond to consumer complaints about motor finance commissions following a landmark court case last month.
The Financial Conduct Authority (FCA) said firms are likely to receive a “high volume” of complaints following the Court of Appeal’s judgement last month.
The Court ruled that a broker could not lawfully receive a commission from the lender without obtaining the customer’s fully informed consent to the payment. It said that lenders had not met this requirement, potentially opening the door to further complaints.
Following the ruling, the FCA said it has spoken with firms and the government to assess the judgement’s implications. It suggested that an extension would likely be necessary.
“Any complaint extension would allow them time to consider how these might be efficiently and effectively handled. This would help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market,” the regulator said in a statement.
Proposals are expected to be published in two weeks, which would mean the complaint extension is in place by mid-December 2024.
Close Brothers and Firstrand intend to appeal the Court of Appeal’s decision. The FCA said it will write to the Supreme Court asking it to “decide quickly” whether it will give permission to appeal.
In the meantime, the FCA said motor finance firms should ensure they have the resources to issue final responses to complaints at the end of the extension. It added that lenders should also consider whether they need to make “financial provisions.”