Watchdog mulls giving car finance firms more time to handle complaints

21st Nov 2024 09:18

(Sharecast News) - The financial watchdog is considering giving firms up until the end of 2025 to handle car finance complaints, it confirmed on Thursday.

The Financial Conduct Authority, which is investigating potential mis-selling in motor finance, said last week that it may introduce fresh deadlines in light of a key legal judgement.

The Court of Appeal ruled on 25 October that it was illegal for banks to pay commission to a car dealer without the customer's informed consent.

The FCA said firms who provide motor finance are likely to receive a high volume of complaints as a result. The two lenders involved in the cases also intend to appeal.

It is therefore consulting on extending the timelines to either 31 May 2025 or 4 December 2025.

The first deadline reflects how long it could take to hear whether the Supreme Court has granted permission to appeal, the FCA noted, while the second would align with a timeline already in place for discretionary commission arrangements (DCAs) complaints. The FCA banned DCAs in 2021.

Allowing more time would help prevent "disorderly, inconsistent and inefficient outcomes for consumers and firms", the FCA argued.

Nikhil Rathi, the watchdog's chief executive, said: "We want to make sure that consumers who are owed money get it in an orderly way, and that the motor finance market continues to provide competitive deals for the millions of people that rely on it."

On Wednesday, Banco Santander's UK arm announced it had put aside £295m to cover possible legal costs and redress associated with motor finance claims, weighing heavily on profits. Earlier this year, Lloyds Banking Group - the UK's biggest provider of motor finance - set aside £450m.