The UK Financial Conduct Authority (FCA) has published a statement informing firms, consumers and stakeholders of next steps in its review of the past use of motor finance discretionary commission arrangements.
The Court of Appeal handed down its judgement in three related motor finance appeals on 25 October 2024, finding that there was a fiduciary relationship between the dealer and the consumer, raising the prospect of widespread liability among motor finance firms that failed properly to disclose commissions to customers. The Supreme Court will hear an appeal against the Court of Appeal's judgement on 1 to 3 April. The FCA's statement confirms that, if it concludes that motor finance customers have lost out (taking into account the Supreme Court's decision), it is likely to consult on an industry-wide redress scheme. Firms would be responsible for determining whether customers had lost out due to their failings, but the FCA would set rules that firms must follow under the scheme and introduce checks to ensure they do. The FCA will confirm within six weeks of the Supreme Court's decision whether it is proposing a redress scheme and, if so, how that would be taken forward. It may also consult separately on changes to its rules, depending on the Supreme Court's decision.
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