Motor finance complaints drive surge in ombudsman cases
Complaints about motor finance commission have made hire purchase (motor) the most complained-about product, with cases more than tripling year-on-year.
The Financial Ombudsman Service has reported a surge in complaints related to motor finance, with hire purchase (motor) emerging as the most complained-about financial product in the latest quarterly data. Between October and December 2024, 15,956 complaints were recorded, up from 11,817 in the previous quarter and more than three times higher than the 5,419 cases in the same period last year.
Issues around motor finance commission were the primary driver of the increase, following recent Court of Appeal rulings against some lenders. The ombudsman has received complaints from consumers who were not informed that car dealers received commission for arranging finance, were given allegedly unfair finance agreements, or were not offered the best available interest rate. Conditional sale (motor) complaints also increased to 2,702 cases, up from 2,171 in the previous quarter.
James Dipple-Johnstone, interim chief ombudsman at the Financial Ombudsman Service, said:
“Every year we help resolve tens of thousands of difficult disputes for consumers and businesses – providing impartial help in often challenging circumstances.
“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.”
Overall, the ombudsman received 68,430 complaints in the third quarter of the financial year, down slightly from 73,692 in the previous quarter but significantly higher than 2023 levels.
Professional representatives have played a major role in the rise of motor finance complaints, accounting for 12,500 of the 15,956 hire purchase (motor) complaints in the latest data. In response, the Financial Ombudsman Service will introduce a £250 charge per case for professional representatives from 1st April 2025, with a partial refund if the complaint is upheld.
