I wrote my first legal update on this subject matter in May 2021, following the Financial Conduct Authority (FCA) ban on discretionary commission arrangement (DCA) on 28 January 2021, and when the streams of letters started to be sent from the bloodthirsty claims management companies attempting to bully our members in paying back thousands of pounds.
Four years later, we are hopefully coming close to the conclusion of the finance commission saga. The Supreme Court hearing is scheduled for 1–3 April 2025, which has been brought by Close Brothers and First Rand Bank Limited after the decision made by the Court of Appeal on 25 October 2024.
The decision made by the Court of Appeal was unexpected by lenders and the motor trade alike, with the judgement confirming that the consumer should be told the amount of commission, and the consumer explicitly consents to it. As you are aware, the FCA’s rules and guidance state that while the existence and nature of the commission have to be disclosed to consumers, the regulator does not require the explicit disclosure of the commission amounts unless the customer specifically requests them.
This decision led to some lenders putting a stop to lending while they amended their paperwork to ensure they were compliant with the new rules off the back of the Court of Appeal hearing.
The FCA’s review is still ongoing, and we are sure that the Supreme Court’s decision in April will have a significant impact on any potential redress scheme the FCA will eventually decide on. We do not believe the redress scheme will have a direct impact on our members, but as we have already seen, the indirect impact is that lenders are running much tighter ships, for example, by being more robust with commission clawbacks and consumer rejections.
If you have any questions or have received correspondence about finance commissions, please do not hesitate to contact Lawgistics.
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