FCA Motor Finance Review – Legal Insights

Harry Grimshaw, our Motor Finance Litigation Manager, explains the FCA’s approach to dealing with motor finance claims and what this could signify for firms like Barings Law.

As of January 11, 2024, the FCA (Financial Conduct Authority) issued a statement describing their future approach to dealing with motor finance discretionary commission arrangement claims. Specifically, the focus is on handling complaints lodged with the FOS (Financial Ombudsman Service).

This statement has been made following concerns that motor finance companies are unjustly rejecting mis-selling claims against lenders.

The FCA will be assessing whether a compensation scheme is needed to deal with the large-scale mis-selling within the motor finance sector. Many individuals may have faced increased costs due to undisclosed commissions imposed by their lender or dealer.

Harry Grimshaw, our Motor Finance Litigation Manager, who has been handling such claims for over two years, explains the FCA’s decision and discusses what this development could signify for firms like Barings Law, actively pursuing legal actions against lenders involved in financial mis-selling within the motor finance industry.

Latest Developments

A pause has been put in place on when and how the FOS will deal with these specific complaints. Generally, this is an interesting and significant development in this area of law, particularly because there have been inconsistent judgements in the Courts and inconsistent decisions at the FOS when dealing with this type of complaint. At Barings Law, we see this as an inherently progressive and positive development.

How Does The FCA Investigation Impact Us?

Barings Law has issued more than 6,000 claims on these arguments in the Courts. These have been progressing through the Courts since we first issued back in November 2022. The decisions of the Ombudsman and this statement from the FCA does not directly impact our issued claims. However, it is anticipated that it will have a degree of indirect effect on the proceedings, and should the future FCA statement release, which is expected in September 2024, support this existing statement, we think that will be extremely beneficial for our claims.

In terms of Barings, because we’re progressing claims through the courts, we are positively impacted by the statement, but we’re not delayed in any way by the restrictions placed on the FOS the FCA during this time.

How Do I Know If I Am Eligible To Submit a Claim or Complaint?

If you took out a Hire Purchase (HP) or Personal Contract Purchase (PCP), or another form of motor finance, sometimes called a Conditional Sale Agreement, between April 6, 2007*, and January 28, 2021*, it is likely that you are eligible to submit a claim. If your agreement started before this time period, it is important to seek legal advice to discover if you may be eligible to submit a complaint through the Financial Ombudsman Service or make a claim through Barings Law.

If you are on an ongoing or existing finance agreement, and it transpires that there was a discretionary commission arrangement in place, which impacted your interest rate that you paid on your agreement, then it appears that you can still submit a claim or could still submit a complaint. The redress you may receive is a reduction in the interest rate that you’ve already paid, and a reduction in the interest rate that you are essentially yet to pay. It is important to note that this is all unconfirmed at present, and we do not know as of yet what the FCA will say in the third quarter of this year.

*If your lender is Moneybarn, Oodle or Advantage, our eligibility dates are February 2018-2024.

How Do I Submit a Claim?

To make a claim, or to make a complaint, through Barings and have Barings Law represent you, it is reasonably simple. You can submit your no-win no-fee claim to us by clicking on the button below. This will take you to our claim page where you can find more information about Motor Finance and fill in our quick and easy form to start your claim with us.

Affordability – A Brief Overview 

At Barings, we represent a number of individuals in complaints related to the affordability of their finance agreements. That could be as to how they entered into the agreement, including the credit check that was carried out, or whether the agreement became less affordable over a period of time, or generally how their finance provider catered to their financial needs and changes in their financial circumstances. 

We represent a number of clients in these complaints and often refer these complaints to FOS. There is a pause on complaints being dealt with discretionary commission arrangements at the Ombudsman, but not to do with affordability. All of our clients who have ongoing complaints that are being dealt with the Ombudsman to do with affordability are continuing to progress. 

We continue to take on more clients for affordability complaints, as we are finding this to be a very prominent issue that individuals are facing. They are entering into finance agreements that are completely unaffordable, or they should never have been entered, or allowed to enter, due to their financial circumstances. 

*Affordability complaints differ from mis-sold motor finance claims, but our legal experts will review your case. If evidence suggests that you have entered into an agreement with potential affordability issues, our team will contact you to discuss the option of submitting an additional complaint, should you choose to do so.