FCA to lift pause on motor finance complaint handling
By Josh White
Date: Wednesday 03 Dec 2025
(Sharecast News) - The Financial Conduct Authority will lift its freeze on handling motor finance complaints on 31 May next year, ending a pause that began nearly two years ago while regulators assessed industry commission disclosure practices.
The move brings forward the original proposed end date of 31 July 2026 and followed legal clarity from both the Supreme Court and the High Court on how lenders should process large volumes of cases.
The watchdog halted certain motor finance complaints in January 2024 to avoid, in its words, "disorderly, inconsistent and inefficient outcomes for consumers" while it investigated whether lenders and brokers had adequately disclosed commissions.
That assessment had now progressed far enough for the FCA to begin consulting on a compensation scheme for customers it believed may have been treated unfairly.
"It is important that complaints are now dealt with promptly, not least as some consumers have been waiting almost 2 years for an answer," the regulator said.
The FCA said it was likely to proceed with a "broad" compensation scheme and was consulting on the timeframes and rules that will govern how affected complaints are resolved.
It added that complaints falling outside the scheme should represent a relatively small proportion of cases, and those consumers "should not have to wait longer than necessary."
Firms would have up to eight weeks after 31 May to respond to complaints that are not covered by the scheme, depending on when the complaint was first received.
In a letter sent on 3 December, the FCA reminded firms they should be actively progressing complaints so they are ready to issue final responses once the pause ends.
Final rules for any compensation scheme were expected in February or March.
The regulator said it intended to set out guidance on how firms should handle complaints involving both scheme and non-scheme elements, noting it "may be simpler and less confusing for consumers" if responses are issued at the same time.
Leasing complaints remained excluded from the proposed scheme and from the extension to the pause, meaning firms must resume normal complaint handling for those cases from 5 December.
In addition, companies would be required to retain relevant records until April 2031 to support consumer protection.
The FCA advised that consumers who had already lodged complaints did not need to take further action.
However, it urged anyone who believed they may have overpaid due to undisclosed commissions to act now, saying consumers "worried that they were not told about commission and who think they may have paid too much for their motor finance, should complain."
Reporting by Josh White for Sharecast.com.
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