The headlines have once again been dominated by news about the motor finance industry. On 11thDecember 2024 the Supreme Court granted permission for two motor finance lenders to appeal a pivotal Court ruling concerning commission arrangements in car finance agreements. This decision allows Close Brothers Limited and FirstRand Bank Limited (the owner of MotoNovo), the chance to overturn the Court of Appeal’s ruling back in October, which stated that the payment of a ‘secret’ commissions by finance companies to car dealers on finance deals, without the fully informed consent of their customers, was unlawful.
Permission to appeal granted by the Supreme Court, also followed a request from the Financial Conduct Authority(FCA) for expedition in hearing the appeal (if allowed) as soon as possible, to assist in securing certainty for the motor finance market.
Jamie Patton, Managing Director at Johnson Law Group, said:
“Whilst it’s a little frustrating for consumers who have already waited so long for clarity in the law, the fact that this matter is now set to be determined by the highest court in the land will hopefully ensure there is definitive guidance and, for the first time in years, legal certainty.”
Following the decision, The FCA said:
“We previously wrote to the Supreme Court asking it to decide quickly whether it will give permission to appeal and, if it does, to determine the substantive appeal as soon as possible. This is because of the potential impact of any judgment on the motor finance market and the many consumers who rely on it. We are considering whether to formally intervene in the case to share our expertise to assist the Court on the substantive appeal.”
A date has yet to set for the Appeal hearing but the Supreme Court has confirmed that it will take place in the 2025 Hilary Term (between Monday 13th January and Wednesday 16thApril 2025.)
FCA Policy Statement: published 19th December 2024
The FCA has published its latest policy statement on motor finance claims in which it has now extended the pause for financial firms to respond to complaints in respect of all types of motor finance commission arrangements to 4th December 2025.
Previously, the pause was only in respect of discretionary commission arrangements (DCAs). This means that firms now have until after 4th December 2025 to respond to all motor finance commission complaints involving DCA and non-DCA matters.
Under new rules set by the FCA,which come into force on 20th December 2024, firms do not have to provide final responses to motor finance non-DCA commission complaints received on or after 26th October 2024 until after 4th December 2025. For non-DCA commission complaints received before 26thOctober 2024, firms have 8 weeks to respond.
The FCA has also confirmed that it plans to formally intervene in the Appeal case to the Supreme Court to share its expertise and to assist the Court.
High Court Judicial Review Decision
On 17th December 2024, following a Judicial Review requested by Clydesdale Financial Services (trading as Barclays Partner Finance), the High Court upheld the outcome of a consumer complaint considered by the Financial Ombudsman Service (FOS) relating to a DCA in a motor finance agreement.
The High Court was unequivocal in its confirmation that the use of DCAs is unfair, and that the consumer was fully entitled to receive the compensation that she was awarded by FOS earlier this year.
What does all of the above mean for your complaint / claim?
Based on the Court of Appeal ruling back in October and the recent High Court Judicial Review decision, we remain confident that the prospects of success in respect of your claim is high. Things may however change following the outcome of the Supreme Court Appeal, which we can probably expect in around 5-6 months’ time.
If your claim relates to an undisclosed DCA then the new FCA rules (effective 20th December 2024) will not have any impact on your claim. This means that firms against whom DCA claims are made do not have to provide a final response until after 4 December 2025. This is known as the ‘pause’.
The pause now also applies to non-DCA (non-discretionary commission arrangements) claims where a complaint has been lodged on or after 26th October 2024.
If your claim is non-DCA and it has been lodged before 26th October 2024 then the pause does not apply and we would expect to receive a final response from the firm involved within 8 weeks of the date of your complaint being lodged. If a final response or no response is received after 8 weeks your claim can be referred to the Financial Ombudsman Service (FOS) or you will have the option of instructing us to issue legal proceedings.
Given the impending Supreme Court Appeal, which is expected to be heard by mid-April 2025, it would not be our recommendation to incur the cost of issuing legal proceedings, since any proceedings issued at this point are likely to be ‘stayed’ (effectively put on hold) by the Court, pending the outcome of the Supreme Court Appeal. In other words, issuing legal proceedings will not produce a quicker outcome in respect of your claim.
It is also likely that the FOS will defer any decision on your claim until after the Supreme Court has ruled in the Appeal.
We anticipate that the Supreme Court will deliver its judgment following the Appeal in possibly May or June 2025.
In the meantime, we will update you further if / when your claim has been submitted to the FOS or there are any further significant developments.