Motor finance complaints to the financial ombudsman almost triple in a year 

Ombudsman received 194% more motor finance cases compared to same time in the previous year as car finance becomes the most complained about financial product for the first time in five years

The Financial Ombudsman Service has said it received more than 68,000 complaints between October and December 2024, with complaint volumes in this period remaining significantly higher than the same time in 2023. 

The Ombudsman resolves customer complaints that financial firms fail to resolve to the satisfaction of their customers.

It said the most complained about product in the latest quarter was hire purchase related to motor vehicles, which it said has risen due to a Court of Appeal decision against some lenders about motor finance commission arrangements.

The UK’s highest court, the Supreme Court, is set to hear an appeal from two car lenders over a landmark Court of Appeal ruling on motor finance commission payments that has left the industry fearing a multibillion pound compensation bill.

The Ombudsman 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; claims that recommendations were influenced by commission; and car dealers not giving the best interest rate available.

James Dipple-Johnstone, interim chief ombudsman of the Financial Ombudsman Service, 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.’ 

The Financial Conduct Authority has given motor finance firms longer to respond to complaints while it carries out its own investigation into whether a compensation redress scheme should be put in place. This relates to customers overcharged by ‘discretionary commission arrangements’ that were banned in 2021.

The regulator was asked to comment on whether motor finance firms are following its advice given the scale of escalated complaints to the Ombudsman.

Motor finance becomes most complained about financial product

Complaints about motor finance have taken the number one spot above current account and credit card complaints for the first time in five years. The Ombudsman received a record high number of 15,956 complaints about motor finance in a three month period than at any other point in five years. Its second highest peak in motor finance cases was between April and June 2024 when it received 15,925 complaints.

A breakdown of the most complained about financial products received by the ombudsman in October to December last year, compared to the same period in 2024.

Financial product	Oct-Dec 2024	Oct-Dec 2023
Hire purchase (motor)1	15,956	5,419
Credit cards	10,957	5,660
Current accounts	8,830	7,804
Car/motorcycle insurance	3,660	4,123
Conditional sale (motor)1	2,702	1,260

1 Hire purchase and a conditional sale are both forms of car finance.

Across all financial products and complaint issues the latest data from the Ombudsman shows it upheld 34% of all resolved complaints in the consumers’ favour, which it said is in line with the previous quarter. It was 35% in the same three-month period in 2023. The Ombudsman told Consumer Voice that a breakdown of the data on uphold rates for motor finance complaints was ‘unpublished’.

What is behind car finance mis-selling complaints?

Research from Consumer Voice uncovered evidence that dealers are still not always telling customers about the commission payments they receive from lenders for arranging their car finance loans. And eight in ten consumers expressed concern about being kept in the dark over secret commission.

The issue of secret commissions first exploded when the Financial Conduct Authority launched its investigation into whether there was widespread misconduct related to discretionary commission arrangements (DCAs), which were banned in 2021. It will make a decision about the best way to pay compensation to consumers who lost out.

Following this came the Court of Appeal’s judgment in October 2024 on three motor finance claims that made it unlawful for dealers to get a commission from car finance lenders without first telling customers about the commission earned, and getting the customer’s informed consent for the payment.

This relates to fixed commission in motor finance agreements as well as discretionary commission arrangements, and goes beyond the regulator’s review into DCAs. 

The two of the lenders in the cases – Close Brothers and MotoNovo owner FirstRand Bank – were granted permission to challenge the October decision by the Supreme Court. The FCA said it is considering the impact of this ruling because of the impact it could have on consumer compensation.

On 19 December, the regulator published a statement to say it is further extending the time firms have to handle complaints relating to motor finance agreements not involving DCAs to 4 December 2025.

In a separate court decision, Barclays lost a legal challenge against the Financial Ombudsman over a ruling that it unfairly paid commission to a car finance broker. The High Court ruling that was handed down on 17 December was welcomed by the FCA for providing clarity to consumer complaints involving DCAs. An appeal against this ruling will be heard by the Court of Appeal. A date for this has not yet been set.

What should I do if I was mis-sold car finance?

Most car finance loans arranged through a dealer will involve commission.

Car finance firms have longer to respond to complaints but you should complain if you are concerned that you weren’t told about commission paid to the person who arranged your loan. And there are time limits for doing this.

If you have already made a complaint about a discretionary commission arrangement and were told by your provider your loan didn’t include a DCA, you must make a new complaint if you are now concerned about another type of commission.

The regulator had given car finance providers until 4 December 2025 before they needed to respond to complaints about discretionary commission arrangements. Car finance providers have been given until after 4 December 2025 before they have to start responding to any other type of car finance commission complaint.

Download our free template letter if you suspect the interest you agreed on a car loan was too high and need help complaining.

You can also get in touch to share your experience with us if you found out after signing your car finance agreement that commission or fees were applied to your loan.

Complaining to the Financial Ombudsman

If you complained and the firm sent you a final response letter, you must contact the Ombudsman by the date given in the letter if you’re not satisfied.

You have until 29 July 2026 or 15 months, whichever is the latter, from the date the final response letter was sent to take your complaint to the Financial Ombudsman. 

More advice on complaining about car finance commission can be found on the regulator’s website.