Car finance complaints go up with more commission problems

The Financial Ombudsman Service (FOS) said it received 68,430 complaints in general between October and December 2024, and complaint volumes in the current financial year remain significantly higher than in 2023/24.

The FOS resolves customer complaints about financial firms. It has heard from people claiming they were not told the car dealer would receive commission from the finance provider for arranging the finance; allegations that some arrangements were unfair; and claims that recommendations were influenced by commission.

Meanwhile, unaffordable and/or irresponsible lending complaints were behind around three-quarters of credit card complaints in the latest quarterly figures.

Fraud and scams continue to be a main driver of current account complaints, the ombudsman service said.

The Financial Conduct Authority (FCA) has previously launched a review of historical motor finance discretionary commission arrangements.

Alongside the review, motor finance firms were given more time to provide final responses to complaints about motor finance where a commission arrangement was involved, and consumers more time to go to the ombudsman, to prevent disorderly and inconsistent outcomes. The FCA also wanted to take account of relevant court decisions before deciding on its next steps.

Here are the most complained-about products between October and December 2024 and the number of complaints received, according to the FOS:

1. Hire purchase (motor), 15,956
2. Credit cards, 10,957
3. Current accounts, 8,830
4. Car/motorcycle insurance, 3,660
5. Conditional sale (motor), 2,702

James Dipple-Johnstone, interim chief ombudsman at the FOS, said: “We are continuing to see high volumes of motor finance commission cases and would encourage businesses to consider whether complaints are covered by the FCA’s temporary complaint handling rules.

“Ongoing legal proceedings are impacting our ability to issue final decisions in these cases but we are putting steps in place to ensure we can resolve them as quickly as possible when we have the clarity we need.”