Motor financing: Extended deadline for complaint processing

The British financial regulatory authority, the Financial Conduct Authority (FCA), has granted lenders an extension until December 4th of next year to handle complaints about car financing contracts with hidden commission payments. The background is a ruling by the London Court of Appeal in October, which declared it illegal for car dealers to receive commissions from lenders without the customer's consent. This extension concerns non-discretionary commission payments and is in line with previous decisions on discretionary commission agreements. The FCA expects a high number of complaints as a result of the ruling and aims to avoid uncoordinated and inefficient outcomes for consumers and businesses with the extended deadline. Recently, the Close Brothers banking group was granted permission by the UK’s Supreme Court to appeal the landmark ruling on motor finance commissions. The decision of the Court of Appeal could lead to a wave of new complaints from consumers who believe they were misadvised in the past. The FCA plans to actively participate in this appeal process to provide the court with their expertise. It emphasized the importance of a swift decision in the appeal and a prompt clarification of significant legal issues. Beyond the complaints processing deadline, the FCA highlights that car leasing and car finance loans are also included in the regulation, despite not being addressed in the Court of Appeal's ruling. An independent investigation into discretionary commission agreements, which were banned in 2021, is already underway. The authority plans to publish further steps and updates on non-discretionary commission agreements next May, depending on the development of the appeal process.