On the 3rd of December 2025, the Financial Conduct Authority (FCA) announced it will lift the pause on handling certain motor-finance complaints on 31st of May 2026.
This pause dates back to January 2024, when the FCA froze final responses to many complaints about commission arrangements between lenders and brokers, including so-called discretionary commission arrangements (DCAs). The freeze was introduced to avoid “disorderly, inconsistent and inefficient outcomes” while the regulator reviewed whether customers had been properly informed about commissions when they took out car loans or finance agreements.
Why the pause is ending
According to the FCA, the reason for ending the pause is that it now has the legal clarity needed following judgments by the UK courts, to define how motor-finance complaints should be addressed when large numbers of cases are involved.
The FCA is also preparing for a potential consumer redress (compensation) scheme aimed at those who may have been unfairly sold motor-finance deals, particularly where commission was not clearly disclosed. The decision to lift the pause aligns with plans to finalise and implement that scheme while giving firms time to prepare.
Notably, the FCA chose to end the pause on 31st of May 2026, two months earlier than the 31st of July 2026 date originally proposed during consultation.
What this means?
- Complaints can be submitted now: Consumers who believe they were mis-sold a motor-finance agreement because commission was not properly explained should submit complaints now.
- Leasing agreements treated differently: Complaints relating to leasing (not traditional hire-purchase or loan agreements) are excluded from the proposed compensation scheme. Firms must begin sending final responses to leasing complaints from 5th of December 2025.
- Record-keeping obligations: Firms will be required to retain relevant records relating to motor-finance agreements until 11th of April 2031.
- Final timeline: If the redress scheme goes ahead, the FCA aims to publish final rules by early 2026 (likely to be February or March), after which firms will respond to complaints under defined rules and timeframes.
By 31st of May 2026, firms must be ready to begin addressing a potentially large volume of complaints. Many of these may fall under the redress scheme the FCA is designing. For those complaints outside the scheme’s scope, firms will still need to provide timely final responses, typically within 8 weeks of the pause ending.
The extended record-retention requirement until 2031 is also significant and means that firms should ensure they have systems in place to preserve relevant documentation.
This FCA development marks a pivotal moment for the motor-finance sector. It underscores the importance of clear, transparent disclosures at the point of sale, especially around broker commissions. It also reminds firms that robust compliance processes and systematic record-keeping are no longer optional but essential for meeting regulatory standards. That’s why we work closely with our Appointed Representatives to support their business growth and remain compliant.
