Category: Motor finance

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FCA publishes a statement on key considerations for any consumer redress scheme for motor finance commissions

Earlier today, on 5 June 2025, the FCA published a statement entitled ‘Key considerations in implementing a possible motor finance consumer redress scheme’. 

The key points from the statement are:

– If the FCA proposes “an industry-wide consumer redress scheme“, it’ll set out rules on how to assess claims and calculate redress.  The aim of the scheme would be to make it “easy for consumers to understand and participate in, without needing to use a claims management company (CMC) or law firm“.

– The FCA has been “speaking with consumer groups, firms and industry trade bodies to get their views on important issues to consider if we do introduce a redress scheme“.  If the FCA decides to propose a redress scheme, it’ll consult on why and explain how it thinks a scheme could work. 

– Given the pre-consultation engagement, the FCA “may decide to have a shorter than normal consultation window (for example, 6 weeks)“.

– There will be seven key principles:

(1) comprehensiveness: the scheme should be as wide “as possible so consumers don’t have to go elsewhere, like court“;

(2) fairness: the approach (both on breach and redress) should be “fair to consumers and firms“;

(3) certainty: providing finality for both firms and consumers;

(4) simplicity and cost effectiveness: easy for consumers to participate and the cost of delivering the scheme should be proportionate for firms;

(5) timeliness: resolve the majority of claims “within a reasonable timeframe“;

(6) transparency: consumers should receive clear explanations of decisions and data on the progress of the scheme should be publicly available; and

(7) market integrity: support the ongoing, long-term availability of high quality, competitively-priced motor finance.

– The FCA acknowledges that there can be tensions between these principles and it will aim to get the balance right.

– Scope of a redress scheme: some features to consider are: (a) opt-in or opt out and (b) calculating redress must be “fair to consumers who’ve lost out” and “ensure the integrity of the motor finance market” (and the FCA acknowledges it has seen some “highly speculative figures by some CMCs and law firms“)

– The FCA continues to say that it’ll “confirm within 6 weeks of the Supreme Court judgment whether we’re proposing to introduce a redress scheme. If so, we’ll also set out timings for when we would issue a consultation“.

– If the FCA proposes to introduce a scheme, the final rules for any scheme would “be in 2026“.  The FCA is also keeping under review whether to make any changes to its Handbook.

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Advertising Standards Agency bans a diesel emission claims ad implying an association with, or endorsement by, the UK Government

On 16 April 2025, the UK Advertising Authority (the ASA) published a decision on whether a post on X (formerly Twitter) about claims relating to diesel emissions published by Cambridge Corporate Consultants Ltd t/a The Claims Guide (The Claims Guide) was misleading. The ASA decided it was. 

The post on The Claims Guide’s X post stated: “Owned a BMW, Citroen, Ford, Peugeot, Volvo, or Jaguar & Land Rover diesel car? Manufacturers are accused of cheating emissions tests […] Over £193 MILLION has been paid. Find out if you qualify”.

The post included an image of black text on a white background that stated: “Diesel Emissions Claims […] Make a claim Drivers can potentially make a diesel emissions claim if they owned or leased a diesel car Claims are expected to [sic] worth up to £10,000 each […] Eligibility is dependent on the exact make and model, so should be checked using the official reg checker” and “Check Your Car In Seconds. Get Up To £10,000 With A Diesel Claim”. The post linked to a page of the The Claims Guide’s website headed “Diesel Emissions Claims”. 

The ASA challenged whether the ad misleadingly implied that The Claims Guide was associated or endorsed by the UK Government. 

The Claims Guide’s response was that “any implication of association with or endorsement by the UK Government was unintended”. 

The ASA upheld the challenge. It decided:

– the image had the same “typography, the black and white colour scheme, and simple layout” as the Government’s website;

– these elements (and others) were “distinctively associated with the GOV.UK website and therefore would give consumers the impression that the company “The Claims Guide” was officially approved, endorsed or authorised by the Government to help consumers make diesel emission claims”;

– this was reinforced by the reference to “the official reg checker”(when there was no such checker). 

The advert was therefore banned because it “implied that The Claims Guide was approved, endorsed or authorised by the UK Government, and that was not the case”.

This is a useful and robust decision from the ASA. It ensures the advert cannot be used again by The Claims Guide. But there are many similar adverts on social media, often linked to diesel emissions or motor commissions. Firms who advertise in such a way, or make other misleading claims, may therefore face engagement from the ASA along with their own regulator. 

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FCA issues statement on its next steps in its motor finance review

Earlier today, on 11 March 2025, the UK Financial Conduct Authority (the FCA) published a statement on its next steps in its motor finance review. The FCA says:

– If, taking into account the Supreme Court’s forthcoming decision on the appeal from the Court of Appeal’s decision in Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2024] EWCA Civ 1282, it concludes motor finance customers have “lost out from widespread failings by firms, then it’s likely we will consult on an industry-wide redress scheme“;

– Under a redress scheme, “firms would be responsible for determining whether customers have lost out due to the firm’s failings. If they have, firms would need to offer appropriate compensation. We would set rules firms must follow and put checks in place to make sure they do“;

– The FCA no longer plans to make a further announcement in May 2025. Instead, the FCA will confirm its position “within 6 weeks of the Supreme Court’s decision if we are proposing a redress scheme and if so, how we will take it forward“; and

– The FCA’s next steps on non-discretionary commission arrangements will also be informed by the Supreme Court’s decision.

There are some interesting points from this statement:

– The statutory test under Section 404 of the Financial Services and Markets Act 2000 refers to it appearing to the FCA “that there may have been widespread or regular failure by relevant firms to comply with requirements applicable to the carrying on by them of any activity“. The FCA’s statement that it may (depending on the circumstances) consult on such a scheme is therefore a simple re-statement of part of the test for a consumer redress scheme under the statutory provisions.

– It is unsurprising that the FCA will not make an announcement in May 2025: this seemed inevitable once the lenders were given permission to appeal by the Supreme Court in December 2024.

– There is no mention of the appeal to the Court of Appeal from the High Court’s decision in R (Clydesdale Financial Services Limited) v Financial Ombudsman Service [2024] EWHC 3237 (Admin). This has a ‘hear by’ date of 8 December 2025 and the Court’s consideration of the FCA’s rules and guidance in the Consumer Credit Sourcebook must (it is submitted) be part of the FCA’s wider consideration of whether there has been “widespread or regular failure“.

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FCA proposes to extend the time firms have to handle motor finance commission complaints

Earlier today. on 21 November 2024, the UK Financial Conduct Authority (the FCA) published a press release and a consultation paper setting out its proposals for further changes to complaint handling rules for motor finance commission complaints.

In broad terms:

– the FCA proposes to extend its current rules in DISP Appendix 5 to motor finance non-discretionary commission arrangement (or a DCA) commission complaints;

– the FCA is consulting on two proposals meaning there would be a pause for issuing a final response letter on a non-DCA motor commission complaints to either (a) 4 December 2025 (to align with DCA motor commission complaints) or (b) 31 May 2025;

– the FCA says it will set out its next steps on discretionary motor finance commission complaints in May 2025 and proposes to set out its position on non-discretionary motor finance commission complains at the same time (as it believes that the Supreme Court will have made a decision on whether to give permission to appeal in Johnson v FirstRand Bank Limited (London Branch) t/a MotoNovo Finance [2024] EWCA Civ 1282 by then); and

– the FCA proposes to extend the time to refer a complaint about a non-DCA motor commission complaint to the Ombudsman Service until the later of 15 months from a final response letter, or 29 July 2026.

The deadline for responding to the consultation is 5 December 2024. It is likely that new rules and guidance will be made shortly afterwards.

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FCA makes rules and guidance extending pause for handing complaints about motor finance discretionary commission arrangements

On 24 September 2024, the UK Financial Conduct Authority (the FCA) published a press release and Policy Statement 24/11: ‘Extending the temporary changes to handling rules for motor finance complaints’ (PS24/11). PS24/11 effectively implements the changes proposed by Consultation Paper 24/15: ‘Extending the temporary changes to handling rules for motor finance complaints’.

The changes to DISP Appendix 5 come into force 26 September 2024.

The key changes are:

– the pause on the requirement for firms to provide a final response to DCA complaints within 8 weeks, giving complainants the right to go to the Financial Ombudsman (which was due to end on 25 September 2024) will be extended to 4 December 2025 (see DISP App 5.2.1R(2));

– there are new requirements on keeping consumers informed about the pause (see DISP App 5.2.5AR to DISP App 5.2.5CR);

– the timeframe for consumers who receive a final response on relevant complaints to decide whether to refer their complaint to the Financial Ombudsman is extended to 29 July 2026 (at the earliest) (see DISP App 5.2.9R(3)); and

– requirements to maintain and preserve relevant records will remain in place until 11 April 2026 (see DISP App 5.3.1R(2)(b)).

There are some interesting points for firms:

– the FCA makes it clear that PS24/11 is relevant to “motor finance providers” and “motor finance credit brokers, including motor dealers“;

– the FCA’s view is that neither the original pause, nor these changes, “prevent consumers or their representatives from … taking legal action“;

– the ongoing judicial review (which is due to be heard between 15 and 17 October 2024), and the Court of Appeal cases dealing with commissions (where judgment is reserved), are relevant to the FCA’s decision making; and

– because “many motor finance agreements involving DCAs were made, or ended, more than 6 years ago, it is likely that the 3-year rule [on time-barring] will be more relevant for consumers“.

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FCA consults on further pause for handing motor finance discretionary commission arrangements

🚨 Earlier today, on 30 July 2024, the FCA published a consultation paper entitled ‘CP24/15 – Extending the temporary changes to handling rules for motor finance complaints’ and a press releaseproposing to extend the current pause to the time that firms have to respond to motor finance complaints about discretionary commission arrangements.

📆 The FCA says it proposes to set out its next steps in May 2025 (and not September 2024).  By then, the FCA says it’ll have analysed: (a) the data it has collected from motor finance firms and (b) the outcome of Barclays’ judicial review of the Financial Ombudsman’s decision to uphold a DCA complaint.

✋ The proposed pause to 4 December 2025 will allow the FCA to (for example) consult on a redress scheme or ask firms to deal with motor finance complaints relating to discretionary commission models.  Firms will not be required to respond to such complaints before 4 December 2025.

📝 The FCA also proposes to give consumers until the later of 29 July 2026, or 16 months from the date of their final response letter, to refer any complaint to the Financial Ombudsman Service.

👨‍💻 The deadline for responding to the consultation is 28 August 2024.

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Financial Conduct Authority decides to take action on certain motor finance commission complaints

🚨 So yesterday was an interesting (and busy) day for motor finance lenders and dealers. Firstly, the FCA decided to intervene into motor finance commission complaints. Secondly, two Ombudsman decisions were published on discretionary commission arrangements entered into before 28 January 2021.

🗞️ So what happened?

✍️ The FCA published a webpage about motor finance commission complaints and a press release too.

✋The FCA has paused the 8 week deadline for responding to motor finance complaints where (a) there was a discretionary commission model in place for an agreement before 28 January 2021 and (b) the complaint was made on or after 17 November. This pause lasts until 25 September 2024.

🤔 The lack of any consultation means there are many unanswered questions. For example, what happens to letters of claim? Is there any impact on litigation cases? And what steps should firms take to investigate paused complaints (the Ombudsman has already been in touch on that!).

🕵️ The FCA is using its powers under Section 166. This means some firms will have a skilled person looking into their practices. We know from our clients that meetings are already being booked in today and on Monday.

🪧 But what has the Ombudsman done?

The Financial Ombudsman Service has issued two detailed decisions from an Ombudsman upholding complaints (and one which was not upheld). They both conclude that discretionary commission models are unfair and the customer should effectively only pay the interest at the rate at which the dealer would receive no commission.

There’s much to say on this but some initial points:

(a) It hard to reconcile that guidance and a principle meant that firms should have done significantly more than CONC 4.5.3R required (either before or after the changes in 2021

(b) The approach bears very little resemblance to our experience of dealing with hundreds of similar claims before the Court.

(c) The proposal on redress takes no account of the complexity and reality of a customer’s decision to get a car on finance.

📋 So, what next?

Given it’s fashionable to do three point slogans then mine is: reflect on the developments, prepare for next steps (including, probably, more customer communications) and clearly decide and implement your strategy.

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FCA publishes policy statement banning motor finance discretionary commission models and making minor changes to commission disclosure rules

Earlier today, on 28 July 2020, the FCA published a policy statement, PS20/8, banning motor finance discretionary commission models and making minor changes to commission disclosure rules. The FCA also published a press release.

My one page summary is (and you can see a bigger version if you click on it):

If you want a pdf copy, please get in touch: russell.kelsall@TLTsolicitors.com.

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Financial Ombudsman Service publishes latest edition of ‘Ombudsman News’

On 5 June 2020, the Financial Ombudsman Service (the Ombudsman Service) published its latest edition of ‘Ombudsman News’.

The Ombudsman Service sets out things it will consider when looking at:

– claims by customers under Section 75(1) of the Consumer Credit Act 1974;

– complaints by customers in financial difficulties;

– complaints about motor finance agreements (including expecting businesses to “listen and proactively look for signs of financial difficulties“, expecting firms to be “even more flexible in their forbearance measures” and expecting firms to “fully inform consumers of their options to exit the agreement where necessary/appropriate“); and

– complaints about mortgages.

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Voluntary terminations for regulated hire purchase and conditional sale agreements – does a customer have to take care of the vehicle whilst collection arrangements are being made?

The current COVID-19 restrictions mean asset and motor finance lenders are unable to collect vehicles as quickly as they’d like when a customer voluntary terminates a hire purchase or conditional sale agreement under Section 99(1) of the Consumer Credit Act 1974. Can you ask your customer to carry on taking care of the vehicle whilst you make arrangements to collect it?

After an agreement has been voluntarily terminated, the customer is likely to be a gratuitous bailee of the vehicle.  This type of bailment is known as a ‘deposit’ because the customer keeps possession of the vehicle without payment.

It’s likely there is two possible types of bailments: (a) involuntary deposit or (b) necessary deposit.

Involuntary deposit – this is where the vehicle is left with the customer against her wishes. In most cases, the customer will need to take reasonable care of the vehicle. But the customer will normally need to make good any damage caused deliberately but not negligently.

Necessary deposit – this is where the vehicle is left with a customer because of a peculiar stress or set of circumstances such as an unforeseen disaster (which the Covid-19 pandemic and lockdown arguably could fall into). The customer is likely to be responsible in negligence or bad faith whilst she has the vehicle.

So how do you protect your position and the vehicle? Talk to your customer. Ask if they’re willing to hold on to the vehicle whilst you make your collection arrangements. And talk to them about insurance, and who is going to pay for it.