Thousands of drivers have made complaints about their car finance deals as the deadline nears for motorists to get compensation in a scandal that could rock the automotive world.
The Financial Ombudsman Service received 68,430 complaints between October and December 2024, although this represents a slight drop from the 73,692 complaints reported in the previous quarter.
Despite this decrease, complaint volumes remain significantly higher than in the 2023/24 financial year, when it received just 47,868 complaints in the third quarter of 2023/24.
The high level of cases is partly driven by mass redress issues such as motor finance commission arrangements.
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Experts have consistently called for drivers to make a car finance claim before the deadline
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The service is currently implementing a transformation programme to improve resilience against variations in demand.
The Financial Ombudsman Service and Financial Conduct Authority recently conducted a joint Call for Input seeking ways to modernise the redress framework.
This initiative aims to address challenges in the current system, which works well for individual complaints but struggles with sudden increases in case volumes.
When firms cannot effectively respond to complaint surges, customer compensation is often delayed.
The FOS said it had heard from people complaining that they were not informed that the car dealer would receive compensation for arranging the finance and allegations that some arrangements were unfair.
Motor finance commission issues have driven increases in hire purchase and conditional sale complaints.
James Dipple-Johnstone, Interim Chief Ombudsman, commented on the situation and offered advice to motorists.
He 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."
He noted that ongoing legal proceedings are affecting their ability to issue final decisions in these cases.
From April 1, 2025, the Financial Ombudsman Service will charge professional representatives £250 to refer a case.
Representatives will receive £175 back if the complaint is upheld in the consumer's favour, reducing the charge to £75.
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Estimates suggest that the scandal could cost car finance lenders as much as £38billion GETTYEach representative will be allowed to bring ten cases for free each financial year, while every subsequent case will incur acharge.
The service will remain free for families, friends, charities and voluntary organisations helping people with complaints.
