The financial watchdog has brought forward the deadline for motor finance firms to handle complaints.
The UK’s financial watchdog has said motor finance firms must start handling complaints two months earlier than originally planned, as it finalises a compensation scheme for those affected by the mis-selling saga. The Financial Conduct Authority (FCA) will be lifting a pause on the handling of certain motor finance complaints on May 31, rather than the July 31 deadline it previously proposed.
The watchdog said firms should already be investigating complaints but have not needed to respond to them since the FCA put the process on pause in January 2024. This was intended to prevent disorder and inconsistency while it put together plans for an industry-wide compensation scheme.
Around 14 million people across the UK may be due compensation payouts averaging £700 as a result of hidden commission on motor finance deals agreed between April 2007 and November 2024.
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In an update on Wednesday, the FCA said: “It is likely that we will go ahead with a scheme and complaints that fall within it will be dealt with under specific rules, which will include timeframes for them to be dealt with.”
The regulator’s plans for a redress scheme have been met with significant pushback from lenders.
It is currently consulting on the details of the scheme, which is expected to launch early next year.
The FCA said that ending its pause on handling complaints two months earlier than planned gives firms sufficient time to be ready to respond to them.
It expects that the majority of complaints will fall within the scope of its redress scheme – but firms will also have to be ready to respond to those that do not.
Commenting on the update, Richard Pinch, Senior Director of Risk at leading independent financial services UK consultancy Broadstone, said: “The finalised complaints rules from the FCA will make it simpler for firms to report and improve transparency whilst simultaneously strengthening protections for vulnerable customers. It delivers on the regulator’s objectives of cutting additional burdens on firms without losing, and indeed building, consumer protections.
“The additional granularity in data that the regime will create is to be welcomed as it will ensure accountability at firm level, more efficient regulatory scrutiny and a greater ability to intervene on behalf of consumers.
“The new regime will begin at the start of 2027 giving firms plenty of time to prepare and deliver a smooth transition to the new reporting processes.”
The amount expected to be issued is around £700 on average, but this figure could go up or down, depending on the amount of finance you borrowed and the length of borrowing time.