Motor finance firms urged to boost engagement as complaints hit 70,000

Motor finance complaints have more than tripled year-on-year to 73,328 for 2024/25, as lenders and the industry prepare for the Supreme Court Ruling on commissions.

The latest Financial Ombudsman Service (FOS) data was cited as a warning signal to motor finance lenders and the industry, with Miles Roberts, Kaizian chief executive urging an even greater focus from firms to plan for handling customer contact and an anticipated redress scheme.

The figures from FOS was part of the organisation's annual complaints data and insight report for 2024/25.

Roberts said it’s critical to remember the FOS figures are just the complaints that have been referred to them.

He estimates that the numbers the motor finance sector is handling as a whole are much bigger, in no small part fuelled by the activities of claims management companies (CMCs).

He echoed the advice given at the recent Finance and Leasing Association Insight25 event, where experts from law firm Addleshaw Goddard advised that firms must not waste time ahead of the judgement.

Firms should be working already to understand their customer cohorts, and what the customer journey has been, particularly looking at commission disclosures, said Claire Hughes, Addleshaw Goddard's consumer credit partner.

Mapping for potential liabilities will help firms be able to understand their position once the Supreme Court judgement lands.

Roberts said: “Of course, there is still so much unknown about the outcome of the Supreme Court case; but what is an absolute certainty is that car finance lenders are already experiencing huge volumes of complaints and these will undoubtedly be impacting their capabilities to handle ‘business as usual’ activities.

“The burning question for motor finance providers right now is how they manage these significant levels of consumer complaints, coming predominantly via the CMCs.

“And once the Supreme Court outcome is known and the Financial Conduct Authority (FCA) consultation published, what resources they will need to interrogate their customer data, possibly going back to 2007. As well as calculating the value of redress and managing customer contact.”

The Supreme Court is currently hearing an appeal related to the disclosure of commission by motor finance providers.

The FCA is currently considering setting up a formal redress scheme once the Supreme Court delivers a final ruling on the issue, which is expected to be later this month.

Originating from the Court of Appeal's ruling against undisclosed commissions, the case has significant implications for the motor finance industry with most major players already reporting significant provisions for anticipated redress.

Kaizian believes that waiting for the final ruling or consultation paper “is not a strategy—it’s a risk”.

It is advising firms to review complaint-handling capacity, historic data retention, and operational preparedness.