The FOS reports over 10,000 motor finance complaints: Are we really surprised?

legal updates

The good news currently is the FCA is focussing its attention on the lender and not our members.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

The Financial Conduct Authority (FCA) completed its motor finance review in March 2019. Now, nearly five years later, the FCA is going to investigate how complaints for motor finance commissions are being dealt with!

We have provided our members with updates on this matter since May 2021, and we have been aware of numerous Financial Ombudsman Service (FOS) complaints sent over from our members. These complaints have been ongoing for months and the FOS has only provided one adjudication, which they found in our member’s favour (Note: the adjudication was two pages!) However, they appear to have provided two adjudications for the FCA that support the FCA’s point of view.

The good news currently is the FCA is focussing its attention on the lender and not our members. Headlines in the media confirm as much: “Lenders could face £10bn compensation bill over car financing.” That said, if the lenders lose billions, they will look to recoup in other ways in the future.

The FCA banned discretionary commission models in January 2021 and made amendments to their rules and guidance. This was on the back of its thorough review (“Our findings need to be taken in context: the sample size was small and biased towards independent retailers offering PCP or other forms of hire-purchase.). The FCA reviewed only 1000 finance agreements as part of its review. To add a bit of context, approximately two million motor finance agreements were written in 2022.However, this resulted in the following headline: “Millions of people in the UK may have been mis-sold car finance.”

One of the interesting facts to come from the FOS’s 64-page and 70-page adjudications, and included in the FCA’s press release, was the Ombudsman’s comment on the Finance and Leasing Association’s reporting that the county courts have dismissed 55 of the 86 motor finance commission claims that have been tried to August 2023. The Ombudsman’s conclusion stated: “I don’t think that this is necessarily indicative, and certainly not determinative, of the approach that a court would be likely to take in this case given the facts I’ve set out.” A bold statement to make as these county court claims would not have been dissimilar to the complaints received by the FOS.

Whilst we await the FCA’s outcome of its review, which it has stated will take at least six months, please continue to send us any finance commission letters. We will continue to review the situation and keep you updated on any developments.

DMS NavigatorDealer Management System software for Car Sales, Aftersales and eCommerce

Our dealers use us to help them be more Efficient and Profitable!

You can use our Dealer and Lead Management software to integrate all dealership departments, both online and physical ; providing all in-house functions; Invoicing, Stock Management, Accounting and Marketing as well as interfacing for advertising, ecommerce and more.

John McDougallLegal AdvisorRead More by this author

Related Legal Updates

More of the same from the FCA

Dealing with discretionary commission arrangements and concern that customers are not getting a fair deal on GAP (Guaranteed Asset Protection) insurance products.

While We Wait: Preparing for the FCA’s Review on Motor Finance Commissions

As anticipated, the FCA was not particularly helpful when questioned about the various issues of investigating complaints that were outside of the standard retention periods for documentation.

FCA Commission Review: Separating fact from fiction in the wake of scaremongering

Attend a complimentary seminar hosted by the FCA for first-hand information – Scheduled for Wednesday, 24 January 2024.

The FCA means business

The FCA are closely monitoring how firms are putting their new rules in place and will take action against those that aren’t following them.

The Motor Ombudsman (TMO) – Is it “fit for purpose”?

It seems TMO never sought to ask that basic question and, by the time the penny finally dropped, the contract with the finance company had taken place more than six years ago

Financial promotion on social media

The FCA’s supervisory approach to financial promotions in social media was issued in 2015.

Another victory, but the problem has still not gone away!

The FOS confirmed in the article they had not yet published any final decisions on commission-related complaints.

Get in touch

Complete the form to get in touch or via our details below:

01480 455500

Vinpenta House
High Causeway

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.