Car finance mis-selling complaints face delay

Car buyers who were mis-sold finance agreements may face significant delays in receiving compensation due to recent developments in the ongoing mis-selling scandal. The Court of Appeal’s ruling has broadened the scope of cases eligible for payouts, potentially leading to billions of pounds in compensation for customers who were unaware of hidden commission payments on their agreements.

The Financial Conduct Authority (FCA), tasked with regulating the finance industry, has responded to the court’s decision by proposing to extend the timeframe for car dealers to handle complaints. Two options are currently under consultation: extending the deadline to the end of May or aligning it with a later deadline in December 2025. While this would allow dealers and lenders more time to manage the influx of new complaints, it could also leave affected customers waiting even longer for resolution.

The heart of the issue lies in undisclosed commissions, which were often buried in terms and conditions or completely omitted from customer agreements. One such case is that of Marcus Johnson, a car buyer who unknowingly paid an additional 25% commission on his car loan. Like many others, Marcus was unaware that his dealership profited significantly from his finance agreement. His case, along with others, has highlighted the need for greater transparency and fairness in the motor finance industry.

The implications of this ruling are vast. Since 2021, the FCA had already banned commission structures that incentivised dealers to charge higher interest rates. However, the recent Court of Appeal decision goes further, ruling that all commissions—whether discretionary or not—must be disclosed to and agreed upon by the customer. Banks and lenders now face potentially catastrophic financial liabilities, with analysts estimating compensation costs could reach as high as £16 billion.

In response to this legal development, some lenders have paused new finance agreements, while others have set aside millions of pounds in preparation for potential payouts. The FCA, meanwhile, has sought guidance from the Supreme Court to determine whether the Court of Appeal ruling will be upheld or reviewed further. The regulator has emphasised the need for an “orderly compensation system,” balancing fairness for consumers with practical timelines for the industry.

Opinions on the FCA’s consultation are divided. The Finance and Leasing Association, representing motor finance providers, has described the proposal to extend deadlines as a “sensible move” to avoid overwhelming the system. However, legal experts and consumer advocates argue that any delay risks prolonging the financial hardship for customers already affected by these practices.

This situation underscores the complexities of resolving widespread mis-selling scandals and ensuring justice for consumers while managing industry-wide fallout. For affected car buyers, the path to compensation may still take months—or even years—to navigate.

For more details, read the full article on BBC News: Car finance mis-selling complaints face year’s delay.