Car buyers set to gain extended time to complain following vehicle finance ruling

Buyers who took out car finance deals that included a non-discretionary dealer commission could have longer to lodge their complaints following a court ruling.

The Financial Conduct Authority (FCA) is set to make a final ruling on whether or not to extend the complaints period within the next two weeks and, “if taken forward, would mean the complaint extension is in place by mid-December 2024”.

It follows from a Court of Appeal judgement which effectively banned dealers from making commissions on finance deals unless consented to by the car buyer. The ruling, which saw the cases of Johnson v FirstRand Bank Limited, Wrench v FirstRand Bank Limited and Hopcraft v Close Brothers, all had similar scenarios, according to the court.

In each case, the claimant had visited a car dealership to buy a new car and had entered into a finance agreement as a way to pay for the vehicle. This credit agreement was organised by the vehicle dealership and provided by the associated bank. The commission for the finance agreement was structured in such a way that permitted the dealer to fix the interest rate – with the higher the rate, the higher the commission.

The two lenders involved in the case intend to appeal, according to the FCA.

It stated that “the proposed complaint extension will cover at least the period until the Supreme Court decides whether to grant permission to appeal. The FCA will include options on the length of the proposed extension in its consultation”.

It added: “Motor finance firms will need to use the time provided to ensure they have the resources to issue final responses to complaints at the end of a proposed extension. Motor finance firms are also likely to need to consider whether they should make any financial provisions as complaints need to be handled in line with the law.

“Customers who believe they have cause to complain about commission arrangements should make them as normal.”