Motor finance complaints hit record levels
The UK financial ombudsman has received a record number of complaints about motor finance loans in the most recent quarter, according to new data.
On Tuesday, the Financial Ombudsman Service (FOS) said that complaints about car loan cases had surpassed credit cards as the subject with the most unresolved complaints in the financial sector.
Some 18,658 new car loan cases were brought to the ombudsman’s attention in the three months to December, while there were 10,957 credit card complaints.
Figures for the final quarter show car finance cases rose by a third from the previous quarter and more than tripled year-on-year to record levels.
“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,” James Dipple-Johnstone, interim chief ombudsman at the FOS, said.
It comes ahead of a key court case next month in the ongoing motor finance scandal, in which car loan providers are expected to challenge a ruling from the Court of Appeal.
Last October, the Court of Appeal ruled that lenders did not obtain customers’ consent to the amount of commission they charged on motor finance.
The judgement sent shockwaves through the lending sector by placing many banks on the hook for billions in compensation.
The Financial Conduct Authority (FCA) has suspended motor finance complaints until December 4, 2025, to allow time to assess the outcome of upcoming court cases related to the scandal.
Dipple-Johnstone said: “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 increase in motor finance complaints at the FOS came despite a fall in the overall number of cases. The full tally of complaints came in at 68,430, down seven per cent on the prior quarter.
The ombudsman added that fraud and scams continued to drive up complaints about current accounts, which ranked third behind car loans and credit cards.