FCA announces temporary rules on motor finance commission complaints

The Financial Conduct Authority announced temporary rules on 19 December 2024 extending how long firms have to respond to motor finance complaints involving a non-discretionary commission arrangement, and how long consumers have to refer complaints to the Financial Ombudsman Service¹. The ombudsman service says the rules for all complaints about motor finance agreements where commission arrangements were in place are now in line with those announced in January 2024, which covered agreements linked to discretionary commission arrangements¹.

Under the December 2024 announcement, financial businesses had until 4 December 2025 before they had to start responding to complaints again, and customers had longer to bring a complaint to the ombudsman, until at least July 2026¹. Black Horse, a motor finance lender, states that on 19 December 2024 the FCA extended its pause to include complaints where a non-discretionary commission arrangement was involved².

A discretionary commission arrangement is one where the finance provider pays the car dealer commission or a fee based on the interest rate paid under the agreement, and the dealer can set or adjust that rate; the FCA banned these in January 2021¹. Other arrangements include a fixed rate, where the provider pays a set amount of commission to the dealer, usually a percentage of what is borrowed, and a flat fee, paid for every agreement processed or arranged¹.

The ombudsman service says ongoing legal action involving commission arrangements in motor finance could also affect its work on complaints involving similar issues, and that the findings of the Supreme Court, which was to consider an appeal of the judgment in Johnson, Wrench and Hopcraft in early 2025, might be something it needed to think about¹. On 17 December 2024 the High Court found in the ombudsman service's favour in a review of its decision to uphold a complaint relating to a discretionary commission arrangement in a motor finance agreement¹.

Why it matters for households

The extension applied to complaints about motor finance agreements where a non-discretionary commission arrangement was involved, alongside those already covered where a discretionary arrangement applied¹. For consumers, the practical effect was a longer window to refer a complaint to the ombudsman, until at least July 2026, while firms were not required to respond to complaints until after 4 December 2025¹. The ombudsman service says it cannot settle a number of complaints on car finance commission until after the Court of Appeal hearing¹.

Black Horse states that the FCA has been reviewing commission relating to regulated motor lending for personal motor vehicles taken out on or after 6 April 2007 and before 1 November 2024, including hire purchase and personal contract purchase agreements, and that the scheme is designed to compensate customers who were not given enough information about commission arrangements when they took out their agreement². It also states that parts of the scheme are paused as it faces a legal challenge, and that there is no car finance compensation scheme in place yet².

What happens next

The ombudsman service says it will update customers directly about next steps as soon as it can, and that there is no need to contact it in the meantime¹. Black Horse says it will continue to prepare for the scheme, review complaints and progress cases where possible, and that some customers may receive a response during this period if their complaint falls outside the scope of the scheme or does not meet the criteria for compensation². It says it aims to get in touch again within eight weeks with an update, or by sending a final response letter explaining why an agreement falls outside the scope of the scheme².

The ombudsman service says that if a complaint is about a lease or hire agreement, the normal time limits apply: a business must respond within eight weeks, and the consumer has six months from the date of that response to refer the complaint to it¹. More detail on deadlines for car finance commission claims and on taking a complaint to the Financial Ombudsman Service is set out in the site's guides.