This week, the Financial Conduct Authority (FCA), announced they were delaying their planned decision on whether firms systemically mis-sold car finance through Discretionary Commission Agreements from September 24 to May 25.

While a consumer redress scheme is now more likely than when the FCA started their review, it has shifted the timeline considerably. Jamie Patton, Managing Director at Johnson Law Group, shares his thoughts:

“This is a very frustrating development for consumers who have been victims of mis-sold care finance.

“Delay of the expected redress scheme by a further 12 months is quite frankly unacceptable and represents a further bar to access to justice whilst the FCA gives the banks yet further breathing space to hang on to money they are not entitled to.

“Let’s not forget that the FCA started this journey back in April 2017 when they began investigating the car finance industry. It took them two years to produce a report, (“Our work on motor finance – final findings”) which came out in March 2019 where it concluded that:

“We are concerned that the way commission arrangements are operating in motor finance may be leading to consumer harm on a potentially significant scale.”

“It also concluded that some consumers were paying “significantly more” for their finance because of the way lenders chose to remunerate brokers and it identified widespread use of commission models linked to the interest rate resulting in customers paying up to £300 million more annually in interest charges.

“It then took the FCA two years before it changed the Consumer Credit Sourcebook (CONC) effectively banning discretionary commission models in January 2021!

“Not only do I find myself asking: Why did the FCA wait two years before taking any action but also, why are they now carrying out yet another review (which looks like its going to take another two years) when they had a concluded report on the widespread use of these banned commissions back in March 2019?

“I also find myself asking why has the FCA excluded from the “pause” commission cases involving a fixed fee? It’s clear from its most recent update that they are awaiting guidance from the Court of Appeal when it hands down its judgement in Johnson, Wrench and Hopcraft -v- Firstrand Bank and Close Brothers (expected in October this year) which deals exclusively with Fixed Fee commissions. So why not extend the pause to those type of cases? Sadly, they have not done that so we therefore find ourselves in two tier situation where a significant proportion of complaints are still being pushed through to the Financial Ombudsman Service (FOS) in the usual way (with FOS being overwhelmed and just sitting on cases whilst they await the FCA’s delayed position on a redress scheme) whilst others are subject to a pause and held in limbo outside any system of redress. In either case people will now have to wait until early 2026 before they can get any satisfaction.

“The FCA needs to be, in my view, much more responsive to protecting the rights of consumers. But as it stands, having identified issues in April 2017 that triggered the investigation into car finance mis-selling, consumers will now have wait until December 2025, at the earliest, before they might finally have a redress scheme. That’s an 8-year wait!

“I don’t think it’s unreasonable to suggest that is far too long.”