FCA - Motor Finance Market - Could motor finance customers now get compensation for non-disclosure of commission?

The answer to this is, yes, very likely!

On 11 January 2024, the FCA reported that due to there being a high number of complaints in the motor finance industry and customers seeking compensation for commission disclosure arrangements, it is now considering whether customers could be owed compensation.

For a very long time it has kept quiet about this particular area whilst we’ve seen a huge rise in cases go to the Financial Ombudsman Service (FOS) - mostly driven by claims management companies - and cases going through the court system.

 In its report, the FCA pointed to several claims which have been processed via FOS and took this as an indicator of increasing levels of customer harm. As we know, there are still thousands of claims with FOS still awaiting to be reviewed.

 As a result of this, the FCA has decided now to exercise its powers under s.166 of the Financial Services & Markets Act (FSMA) which will allow it to review historical motor finance commission arrangements and sales across several firms. It wants to ensure that those who are owed compensation: ‘...receive an appropriate settlement in an orderly, consistent and efficient way and, if necessary, resolve any contested legal issues of general importance.’

Receiving a s166 notice from the FCA is a concerning experience for any firm, particularly those who may have had limited previous contact with the regulator. If it does happen it is important to carefully consider your actions, because how you respond will determine the outcome. And even if you have just had a request for information from the FCA, it is important to recognise that your responses will determine whether the regulator is content with your approach, or they decide to escalate to a s166.

 At Auxillias we have long experience of the s166 process, and can provide you with upfront advice, and ongoing support through the investigation. Our consultants have worked as s166 Skilled Persons, and they know that firms under investigation who have good professional advisors supporting them have a far easier time of it.

 If you would like more information on this topic, or indeed if you need guidance, advice or support on anything else - please contact us to schedule a no-obligation 30 minute chat.