The motor finance industry is on the brink of a regulatory shift that could reshape how firms handle commissions, complaints and customer redress.

At the heart of it all is the October 2024 Court of Appeal ruling that declared it unlawful for brokers to receive commissions from lenders without disclosing them to customers and obtaining their informed consent. This landmark judgment has set in motion a chain of events likely to lead to one of the most significant consumer redress schemes the sector has seen in years.

A pivotal court ruling shakes the sector

The FCA has already stepped in, acknowledging the scale of the issue and extending the complaint response window for affected cases to December 2025. While the industry awaits the Supreme Court’s final word, the FCA is preparing for a formal redress scheme, likely to be mandatory for all relevant firms. Significantly, this won’t just affect firms involved in discretionary commission arrangements (DCAs), non-DCA commission models could also come under the microscope.

The proposed redress scheme is expected to include firm-wide obligations around complaint handling, centralised guidance and clear standards for assessing harm and compensating customers. A new consumer-facing complaints portal may be introduced, making it easier for individuals to submit claims and reducing reliance on claims management companies (CMCs), whose involvement tends to increase complexity and cost.

For motor finance providers, brokers and lenders, this isn’t just a regulatory inconvenience – it’s a test of operational readiness. Many firms will need to overhaul how they handle historical commission disclosures and identify which customers were affected. Data quality, legal record accuracy and even GDPR compliance will come into play when determining who is entitled to redress.

The strategic advantage of early preparation

Operationally, businesses must act now. They need to build and refine internal processes for complaint triage, review affordability practices and prepare for increased volumes of incoming claims. This goes beyond just commission and is also linked to broader issues like irresponsible lending. Communication plans will need to be reimagined, with consistent messaging across digital and non-digital channels. Technology too, must play a central role, with automation, workflows and reporting tools enabling efficient redress processing at scale.

The firms that act early – by enhancing internal governance, investing in scalable tech solutions and training their teams – will be best placed to manage what’s coming. Whether through internal transformation, expert advisory support, or outsourcing elements of the process, the priority is clear: demonstrate regulatory compliance and deliver fair outcomes for customers.

TCC’s expert team can help you navigate the complexities of motor finance commission complaints with confidence. Whether you need advisory support, interim resource, a fully managed remediation or an automated tech solution, we’re here to ensure your business stays compliant, efficient and customer focused.

We also offer the flexibility to integrate our expert advisory services with cutting-edge technology from our trusted partner, Recordsure – providing you with a seamless, end-to-end intelligent compliance solution. Together, we deliver higher-quality outcomes, faster and more cost-effectively.

Ready to review your approach to motor finance compliance? Talk to our experts today.