Watchdog gives lenders a year to respond to UK car finance complaints
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Financial Conduct Authority sets 4 December 2025 deadline for handling rising number of customer queries. The City regulator has given lenders a year to respond to the rising number of customer complaints over the way they were sold car loans, after a high court ruling left firms fearing a potential £30bn compensation bill.
The Financial Conduct Authority said firms had until at least 4 December 2025 to provide a final response to agreements not involving a discretionary commission arrangement (DCA), in line with a deadline that had already been provided for complaints involving DCAs.
DCAs allowed brokers to adjust the interest rates on motor finance, while non-DCAs do not. A court of appeal ruling in October said it was unlawful for two lenders to have paid a “secret” commission to car dealers without first telling the customer about the commission and getting their informed consent to the payment.
Some lenders have since been flooded with complaints, including from claims management companies and claims law firms. Motor finance companies are likely to receive a high volume of complaints after the judgment, the FCA said. The watchdog had previously suggested the deadline could be set at the end of May or early December, and has opted for the latter. It said it extended the time companies had to handle complaints to “help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms”.
Last week, the supreme court granted permission for two car lenders, Close Brothers and the MotoNovo owner, FirstRand, to appeal against the court of appeal ruling in October. The FCA said on Thursday it planned to formally intervene in the case to share its expertise with the supreme court.
