On 3 December 2025, the Financial Conduct Authority (FCA) announced that it will lift its pause on motor finance complaints handling on 31 May 2026. This will bring an end to a suspension that has been in place since January 2024. The decision comes as the regulator works to finalise a compensation scheme for consumers who may have been treated unfairly regarding commission disclosure.
The FCA initially paused the handling of certain motor finance complaints to prevent what it described as potentially “disorderly, inconsistent and inefficient outcomes” for consumers. The pause was implemented while the regulator assessed whether there had been adequate disclosure of commissions between motor finance lenders and brokers.
During this period, many consumers have been waiting for resolutions to their complaints, with some having waited nearly two years for answers. The FCA has acknowledged the significant impact this delay has had on those affected.
With the Supreme Court having provided legal clarity in August, the FCA is now proceeding with plans to establish how lenders should handle the substantial volume of complaints. The regulator is currently consulting on a compensation scheme designed to address cases where customers have been treated unfairly.
The FCA has indicated that it is likely to proceed with the scheme, which has been designed with a broad scope. Complaints falling within the scope of the scheme will be addressed under specific rules, including defined timeframes for resolution. Final scheme rules are expected to be published in February or March 2026.
The decision to end the pause on 31 May represents an acceleration from the originally intended date of 31 July 2026. This earlier date reflects the FCA’s commitment to ensuring consumers receive fair and timely outcomes while providing firms with sufficient preparation time.
From 31 May 2026, under normal complaint handling procedures (which we expect will apply), lenders would have up to eight weeks to respond to complaints that fall outside the proposed scheme, with the exact timeframe depending on when the complaint was initially received.
The FCA has reminded lenders to progress complaints to ensure they are prepared to issue final responses where appropriate. For complaints covered by the scheme, the regulator will consider how the rules interact with the end of the pause to avoid lenders having to send final responses that would otherwise be dealt with in the scheme.
Motor leasing complaints have been excluded from the extension and are not within the scope of the proposed compensation scheme. Lenders are required to begin sending final responses to motor leasing complaints from 5 December 2025 in accordance with normal complaint handling rules.
Additionally, lenders will be required to retain and preserve relevant records until 11 April 2031, to support transparency and ongoing consumer protection in line with the proposed scheme.
Consumers who have already submitted complaints do not need to take any further action at this stage. However, the FCA continues to encourage those who believe they were not adequately informed about commission arrangements, and who might therefore have paid more for their motor finance, to submit complaints.
The lifting of the pause marks a significant development, potentially affecting a substantial number of consumers and motor finance lenders. The compensation scheme, once finalised, is expected to provide a structured framework for resolving these complaints.
At Barings Law, we believe that ending the pause earlier than anticipated is a positive development. We are now preparing for the final scheme details and we will keep our clients updated when we know more.
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