UK's FCA proposes extension for motor finance complaints
By Frank Prenesti
Date: Wednesday 13 Nov 2024
(Sharecast News) - Britain's financial regulator in consulting on an extension for motor finance companies to respond to consumer complaints about commission on car loans after a court ruling last month that could see billions paid out in compensation.
Three consumers won a landmark victory against Close Brothers and FirstRand Bank in the Court of Appeal, which ruled the lenders should repay "hidden" commissions plus interest as the fees had not been disclosed when the loan deals were signed.
Both lenders have said they will appeal to the Supreme Court and the Financial Conduct Authority said its proposed complaint extension would cover "at least the period until the court decides whether to grant permission to appeal".
It added that it would ask the Supreme Court to make a quick decision "given the potential impact of any judgment on the market and the consumers who rely on it".
"Motor finance firms are likely to receive a high volume of complaints in response to the recent Court of Appeal judgment," the FCA said on Wednesday.
"Any complaint extension would allow them time to consider how these might be efficiently and effectively handled. This would help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market."
The original proposals are expected to be published within two weeks and, if taken forward, would mean the complaint extension is in place by mid-December 2024.
"The Court of Appeal decided it was unlawful for the brokers (car dealers) to receive a commission from the lender providing motor finance without obtaining the customer's informed consent to the payment," the FCA said.
"This required the consumer to be told all material facts, including the amount of the commission and how it was to be calculated. The judgment related to fixed commission in motor finance agreements as well as discretionary commission arrangements (DCAs), which were banned by the FCA in 2021."
Reporting by Frank Prenesti for Sharecast.com
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