On 25th October 2024 three motor finance cases relating to discretionary commission arrangements (DCAs) were heard in Court of Appeal. The court decided it was unlawful for dealers to receive a commission from lenders providing motor finance, without disclosing and obtaining consent from customers.
Permission has now been granted by the Supreme Court for the three cases to be appealed, which should take place around Easter 2025, this should provide more clarity for those firms effected by DCAs.
In a separate case bought to the High Court on the 17th December 2024, the court found in favour of the Financial Ombudsman Service (FOS) in their decision to uphold a case in relation to a DCA relating to a motor finance agreement.
The court ruled that the FOS decision was correct due to the dealer (Barclays Partner Finance) not meeting relevant standards of the Consumer Credit Act 1974. They ruled the dealer did not disclose their commission arrangements to the borrower and that resulted in the relationship between the lender and borrower being unfair.
The FCA predict motor finance are likely to receive a high level of complaints following these rulings and are proposing a further extension to the time firms must respond to DCA complaints. The FCA plan to set out their next steps in relation to DCA complaints in May 2025 following the Supreme Court hearing.
The FCA are also currently consulting on two options for extensions relating to non-DCA motor finance complaints and are looking to publish their policy statement confirming the outcome of their proposal on the 19th December 2024.
If you need support with handling commission disclosures or complaints then please get in touch with a member of the PPL team.