Drivers are set to see major changes to the way car finance complaints are managed after the UK regulator stepped in to protect consumers from being overcharged.
The move by the Financial Conduct Authority would see all car finance commission complaints taken into consideration instead of the existing Discretionary Commission Arrangements (DCAs) complaints previously covered with millions of drivers potentially eligible for compensation.
Drivers will now be given a two-week extension until mid-December to complain to the FCA about commission abuse. The changes come after a recent Court of Appeal ruling moved in favour of consumers.
In October, the Hopcraft, Johnson and Wrench case saw the Court of Appeal decide it was “unlawful” for car dealers to receive a commission from the lender providing motor finance without “obtaining the customer’s informed consent to the payment”.
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Firms will have until December 2025 to respond to complaints
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The ruling meant that any driver who used a car finance scheme could be entitled to compensation for unknowingly paying more interest to cover commission takings.
Money saving expert Martin Lewis, shared on social media: “While not specified in its announcement, I’ve had it confirmed this applies to ALL car finance commission complaints, not just the Discretionary Commission Arrangements (DCAs) complaints previously covered.
“It signals that the FCA is paving the ground to in future broaden the scope of its car finance investigation, so not only at the 40 per cent of past claims that had DCAs (where dealers could increase their commission by increasing interest) but all commissions including fixed commissions.”
Lewis added that “almost everyone” could see money returned to them with this also including drivers who were previously rejected under the DCA complaints process.
The changes mean the number of drivers impacted by the commission scandal could “potentially more than double”, mirroring the extent of the PPI scandal which affected roughly 64 million policies.
Lewis warned that the FCA ruling could have a lasting impact on car financing in the UK with the sector under “substantial threat”.
The regulator explained that after its ruling, motor finance firms are likely to receive a higher volume of complaints as more drivers log their concerns about overpayments.
Firms will then have roughly a year to respond to complaints before the FCA shares its final decision on the case in December 2025. Lewis urged people to log their complaints sooner than later including fixed commission complaints, “in order to avoid missing out due to a potential time bar”.
The expert said the Money Savings Team will also expand its free complaints portal which already had 2.5 million complaints registered to help the “new cohort of people who may be able to complain”.
Sharing what the outcome will be, Lewis stated it would be more likely that DCA commission cases will get future payouts.
He commented: “For ‘fixed’ commissions, this isn’t about the FCA, it all strongly swings on if the Supreme Court upholds the Court of Appeal ruling (assuming it accepts the appeal to it, which the FCA has urged it to do, and to do at speed). That’s the key to if the FCA will broaden its scope.
“These are provisional first thoughts, bashed out at speed, obviously there’s more work to do, but it is big.” The FCA added that motor finance firms will need to use the extended time to ensure they have the resources to issue final responses to complaints before the end of the proposed extension.”
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Martin Lewis shared the update on social media
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Firms should consider whether they should make any financial provisions as part of the cases which need to be handled “in line with the law”, the FCA detailed.