Previous Market Updates
On 25th October 2024, the Court of Appeal handed down its judgement in three cases heard together (Johnson v FirstRand Bank Ltd (UKSC 2024/0158), Wrench v FirstRand Bank Ltd (UKSC 2024/0159) and Hopcraft v Close Brothers Ltd (UKSC 2024/0157)) in which the court considered how intermediaries (“credit brokers”) and lenders should disclose commission and other arrangements which might create a conflict of interest for the credit broker. The court concluded that the credit brokers in each of the cases owed their customers both a disinterested duty and a fiduciary duty and, as such, the lender could not lawfully pay commission to the credit broker unless the customer had provided prior informed consent to the payment of commission. Each of the lenders involved sought permission to appeal the decision to the Supreme Court.
Supreme Court Appeal
On 11th December 2024, the Supreme Court announced that it had granted permission to appeal the Court of Appeal’s decision in each of the three cases.
The application for appeal was welcomed by the Financial Conduct Authority, who had earlier in December 2024 written to the Supreme Court in support of the application to appeal made by FirstRand Bank and Close Brothers.
It is anticipated that the case will be heard by the Supreme Court towards the end of March 2025 with a judgement handed down a few weeks after the hearing.
FCA Policy Statement PS24/18 - Further Temporary Changes to The Handling Rules for Motor Finance Complaints
In January 2024 the Financial Conduct Authority (FCA) announced that it was undertaking a review of historical discretionary commission arrangements (DCAs) in the motor finance sector. Whilst the FCA conducts its review, it introduced a temporary pause to the eight-week deadline to resolve DCA complaints, to allow finance providers additional time to ensure that complaints are dealt with fairly, in a consistent, efficient and orderly way.
On 19th December 2024, the FCA published Policy Statement PS24/18, which outlines further temporary changes to the handling rules for motor finance complaints in response to the Court of Appeal’s judgement and the Supreme Court’s subsequent granting of permission to appeal. The FCA has decided to subject all motor finance commission complaints (both discretionary and non-discretionary commission) to a temporary complaint handling pause. Motor finance firms will not be required to provide a response to any complaint regarding motor finance commission before 4 December 2025, at the earliest. Consumers will now have 15 months (rather than the usual 6 months) from the date of the final response to their complaint to refer the complaint to the Financial Ombudsman.
The pause will apply to a commission complaint if:
• the complaint relates to a commission arrangement and the affected finance agreement was a regulated credit agreement or a regulated hire agreement;
• the asset was a motor vehicle; and
• the affected finance agreement is dated between 6th April 2007 & 28th January 2021.
You can find a link to our commission complaints handling website here.
Martin Lewis took to social media and his website to inform his followers of the FCA’s announcement. He encourages consumers to consider making a complaint even if their transaction did not include discretionary commission and will be updating his car finance reclaim tool to cover the wider scope of complaints. Firms may see an increase in complaints from consumers once the new template complaint letters are available for use.
Mansion House Speech
On 14 November 2024, the Chancellor of the Exchequer gave her first Mansion House Speech. She called on financial regulators to shift their focus from regulating for risk to regulating for growth and the Treasury issued new growth-focused remit letters to the main regulatory bodies.
The Chancellor noted that some of the FCA’s regulatory requirements are duplicative and can be streamlined and looks forward to the outcome of the FCA’s Handbook Review (which was announced in July 2024 with a call for input) as a way of freeing up resources for business to grow.
The Chancellor highlighted the need for reform of the consumer redress system. She called on the FCA and FOS to develop a memorandum of understanding with clear expectations as to how the two instructions co-operate. FOS and the FCA subsequently issued a joint call for input on the topic of modernising the redress system.
On 14 November 2024, the Chancellor of the Exchequer gave her first Mansion House Speech. She called on financial regulators to shift their focus from regulating for risk to regulating for growth and the Treasury issued new growth-focused remit letters to the main regulatory bodies.
The Chancellor noted that some of the FCA’s regulatory requirements are duplicative and can be streamlined and looks forward to the outcome of the FCA’s Handbook Review (which was announced in July 2024 with a call for input) as a way of freeing up resources for business to grow.
The Chancellor highlighted the need for reform of the consumer redress system. She called on the FCA and FOS to develop a memorandum of understanding with clear expectations as to how the two instructions co-operate. FOS and the FCA subsequently issued a joint call for input on the topic of modernising the redress system.