Context
The FCA paused the handling of some motor finance complaints in January 2024 while it assessed whether there had been adequate disclosure of commissions between motor finance lenders and brokers. The pause helped to prevent disorderly, inconsistent and inefficient outcomes for consumers and knock-on effects for firms and the market while the assessment took place.
The FCA is now lifting the pause on the handling of motor finance complaints on 31 May 2026. The timeframe enables the FCA to finalise and begin implementing any compensation scheme, while giving firms a reasonable period to prepare. The FCA says that ending the pause on 31 May 2026, rather than 31 July 2026 as originally consulted on, reflects its commitment to ensuring consumers receive fair and timely outcomes
Key points to note and next actions
- The FCA is consulting on a compensation scheme for customers who were treated unfairly.
- It is likely that the FCA will go ahead with a scheme. Complaints that fall within the scheme will be dealt with under specific rules, including timeframes for them to be completed.
- The consultation is for a scheme of sufficient scope, so as to ensure the number of complaints falling out of the currently proposed scheme are low.
- In a Dear CEO letter (PDF) sent on 3 December, the FCA has reminded firms that they should be progressing complaints. This is to ensure firms are ready to start issuing final responses to complaints if they are not covered by any scheme.
- If the FCA proceeds with a scheme, it will consider how the rules interact with the end of the complaint handling pause, to avoid firms having to send final responses that would otherwise be dealt with in the scheme.
- The FCA intends its final rules to set out how firms should respond to complaints involving both scheme and non-scheme elements, recognising that it may be simpler and less confusing for consumers if firms send a final response to any scheme and non-scheme complaints at the same time.
- Final scheme rules are expected by March 2026.
- Leasing complaints are not in scope of the proposed compensation scheme and are, therefore, excluded from this further extension. Firms must start sending final responses to any motor leasing complaint from 5 December 2025 in line with normal complaint handling rules.
- Record retention: Firms will have to retain and preserve relevant records until 11 April 2031, supporting transparency and ongoing consumer protection in line with the proposed scheme.