Preparing the motor finance industry for the surge in commission complaints

What happened?

In October 2024, the Court of Appeal ruled that it was unlawful for brokers to receive commissions from lenders without disclosing them to customers and obtaining informed consent. The FCA has extended the complaint response window for affected cases to December 2025 while the industry awaits the Supreme Court’s final judgment, and is preparing a formal redress scheme likely to be mandatory for relevant firms.

The expected scheme could extend beyond discretionary commission arrangements to non-DCA commission models, and is likely to include firm-wide obligations on complaint handling, centralised guidance and standards for assessing harm and compensation. A new consumer-facing complaints portal may also be introduced, reducing reliance on claims management companies.

Why does it matter?

For motor finance providers, brokers and lenders, this is a test of operational readiness, not just a regulatory inconvenience. Firms will need to identify which customers were affected by historical commission arrangements and review how those disclosures were handled.

Data quality, legal record accuracy and GDPR compliance will all affect a firm’s ability to determine who is entitled to redress and to respond within the FCA’s timelines.

Who is affected?

Motor finance brokers, lenders and providers involved in discretionary and non-discretionary commission arrangements, along with their complaints, compliance and data governance teams.

Key risks

• Historical commission disclosures that cannot be evidenced for affected customers.
• Data quality or record-keeping gaps that make it difficult to identify who is entitled to redress.
• Complaint-handling processes that cannot scale to a significant rise in volumes.
• Wider exposure beyond discretionary commission arrangements if non-DCA models are brought into scope.

Actions to take

1. Identify which customers were affected by historical commission disclosure practices.
2. Review data quality and legal record accuracy ahead of any redress scheme.
3. Build or refine internal processes for complaint triage and affordability review.
4. Prepare communication plans for consistent messaging across digital and non-digital channels.

Wider implications

Firms that act early, by strengthening internal governance, investing in scalable technology and training their teams, will be better placed to manage the scale of the expected redress scheme than those that wait for the Supreme Court’s final ruling.

Recommendations

TCC recommends that firms treat automation, workflow tools and reporting as part of their redress readiness, and consider advisory support, interim resource or managed remediation where internal capacity is limited.