The Financial Ombudsman Service (FOS) is currently managing approximately 20,000 open complaints related to car finance commission cases, according to a press release.

In January 2024, the FOS published its first representative final decisions, “fully addressing the arguments we’ve received across a range of motor finance complaints,” the statement said.

In March, three car finance commission-related cases were granted permission to proceed to the Court of Appeal. The Court of Appeal’s decision is expected to clarify the application of laws regarding secret and half-disclosed commissions in motor finance payments. The hearing has yet to take place.

Additionally, in April, Clydesdale Financial Services Limited, trading as Barclays Partner Finance, initiated judicial review proceedings concerning one of the FOS’s decisions. The hearings for this judicial review have not yet occurred. The outcomes of both the judicial review and the Court of Appeal cases could significantly impact the FOS’s approach to similar complaints.

Implications for Complaints

In January, the Financial Conduct Authority (FCA) announced a review of the historical use of motor finance discretionary commission arrangements (DCA). As part of this review, the FCA has paused the requirement for firms to issue final responses in some DCA cases and committed to providing further information by 24 September 2024.

Due to the pending court decisions, the FOS is unable to issue final decisions on affected cases for the time being. However, the FOS said it will continue to accept and investigate complaints to ensure it can gather the necessary information to decide on complaints as soon as it is appropriate.

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Additionally, the FOS aims to identify whether complaints are likely to be affected by court proceedings. Furthermore, the FOS will issue provisional assessments and final decisions on cases not impacted by ongoing legal actions.

Deputy Chief Ombudsman James Dipple-Johnstone said: “When people take out a car loan, it’s imperative they are treated fairly, and the financial implications are totally transparent. We have heard from more than 20,000 people with concerns that they were charged too much for their finance.

“It is disappointing that ongoing legal proceedings around motor finance commission have impacted our ability to issue final decisions in some of these cases. However, we’re determined to progress consumers’ complaints as far as we can, and firms should continue to investigate and respond to complaints promptly.”

The FOS’s mandate is to ensure fair compensation for all valid complaints while providing clear and reasoned answers to help consumers understand their position and enable financial firms to apply the learnings to similar complaints.

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