Martin Lewis responds to major update on car finance scandal after floodgates open for driver complaints

The UK finance watchdog has announced it will extend the deadline for motor finance firms to respond to complaints about hidden commission payments until December 4, 2025.

The extension comes after a Court of Appeal ruling in October which declared it unlawful for car dealers to receive commission from lenders without customers’ informed consent.

In response to the news, money expert Martin Lewis shared on X that the decision to include car leasing could significantly widening the potential number of complainants.

He shared: “The FCA has formalised the pause on car finance Commission Disclosure complaints until Dec 2025. Crucially it has also said this WILL include car leasing (unlike DCA complaints which doesn’t).”

Do you have a story you’d like to share? Get in touch by emailing motoring@gbnews.uk

Close Brothers, a financial services company, was granted permission by the Supreme Court earlier this month to challenge the October Court of Appeal ruling.

The Supreme Court’s decision marks the latest development in what could become a crisis for the motor finance industry. Lenders potentially face billions of pounds worth of compensation claims.

But Lewis cautioned that while complaints can still be filed during the pause. He said: “firms don’t have to make a decision on the complaint while the ruling is awaited.”

Lewis also noted that the Supreme Court’s agreement with the Court of Appeal ruling “is far from certain”.

The FCA explained the extension was necessary as firms are “likely to receive a high volume of complaints” following the judgment.

The regulator noted that the move would “help prevent disorderly, inconsistent and inefficient outcomes for consumers and firms.” The FCA also plans to formally intervene in the Supreme Court case to share its expertise.

The watchdog previously wrote to the court requesting a swift decision on whether to grant permission for the appeal.

The FCA said: “While the Supreme Court will hear an appeal, firms must still comply with the law as it stands when arranging new motor finance agreements. To assist firms, we have set out a summary of the Court of Appeal decision, our expectations and some good and poor practice examples.”

The extension will cover motor leasing agreements, despite these not being included in the original Court of Appeal judgment. This expansion of scope is separate from the FCA’s investigation into Discretionary Commission Arrangements, which Lewis notes “doesn’t include leasing.”

The DCA investigation covers around 40 per cent of cases where dealers could increase interest rates to boost their commission.

The FCA aims to outline next steps in its review by May 2025, when it also hopes to provide an update on non-discretionary commission agreement complaints.

However, the regulator noted that its May announcement will depend on the progress of the Supreme Court appeal and the timing of any decision. Consumers concerned about undisclosed commission payments have until July 29, 2026, to refer complaints to the Financial Ombudsman.

LATEST DEVELOPMENTS:

• Hundreds of drivers slapped with fines for breaking Highway Code safety rules
• Wales’s ‘blanket’ 20mph rules see penalties concentrated on two main roads – ‘Targeted approach’
• DVSA announces major changes coming in January 2025 which impacts millions of drivers

Alternatively, drivers have 15 months from receiving their final response letter from the firm, rather than the usual six months.

Lewis added: “The fact leasing has been brought into scope significantly widens the potential number of complainants. Yet all this is dependent on the Supreme Court agreeing with the Court of Appeal when it hears the appeal in Spring(ish), and that is far from certain.

“The pause doesn’t stop people complaining. It just says firms don’t have to make a decision on the complaint while the ruling is awaited.”