The Financial Conduct Authority (FCA) has extended the time that companies have to respond to motor finance complaints following a landmark high court ruling.
In an announcement today, the City watchdog said firms will have until 4 December 2025 to provide a final response to customer complaints over the use of now-banned non-discretionary commission arrangements (non-DCAs).
“We have extended the time firms have to handle complaints to help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms,” said the FCA this morning.
In January, the FCA launched a review of historical motor finance discretionary commission arrangements (DCAs) and whether there was “widespread misconduct” before they were banned in 2021.
DCAs allowed brokers to adjust the interest rates on motor finance, while non-DCAs do not.
However, a landmark court case in October ruled that a broker could not lawfully receive a commission from the lender without obtaining the customer’s fully informed consent to the payment, whether discretionary or not.
Last week, the Supreme Court confirmed it would hear an appeal against the Court of Appeal’s judgement, which targeted merchant bank Close Brothers and South African lender FirstRand.
“We plan to apply to formally intervene in the case to share our expertise to assist the court,” the FCA said.
In addition to the extension today, the FCA extended the time that consumers have to refer a non-DCA complaint to the Financial Ombudsman, from six months to 29 July 2026 or 15 months from the date of their final response letter to the firm.
Following feedback in its consultation, the watchdog also said the complaint handling extension would extend into motor leasing, even though the Court of Appeal’s judgement only covered motor finance credit agreements.
“Consumers also use leasing to access motor vehicles, and it is important that consumers using similar products for similar purposes are treated in the same way,” the FCA said.
The watchdog plans to set out its next steps into its review of motor finance in May 2025.