The FCA responds to Supreme Court's decision on car loan commissions

The Financial Conduct Authority says it will now work hard to "bring greater certainty for consumers firms and investors" following the landmark judgement by the UK's Supreme Court concerning the ways motor finance firms have paid commission to car dealers.

The consumer credit regulator was already looking into historic use of discretionary commission arrangements (DCAs), which it banned in 2021, following some Financial Ombudsman Service rulings when other rulings judged by the Court of Appeal brought that work to a halt.

It had already hinted that it found there was some "issues" to consumers from DCAs and, depending whether the issues were widespread, it might implement a consumer redress scheme to compensate those affected.

Awaiting the Supreme Court's final decision on the lesser court's judgement, the FCA said it would decide within weeks about how a redress scheme might work for those customers affected by DCAs.

An FCA spokesperson has now told Automotive Management that it will take some time to digest the judgement, and its team will work through the weekend to determine its next steps.

"We said we would set out within six weeks whether we would consult on a redress scheme. But we want to provide clarity as quickly as possible. So, we will confirm whether we will consult on a redress scheme before markets open on Monday 4 August.

"Our aims remain to ensure that consumers are fairly compensated and that the motor finance market works well, given around 2 million people rely on it every year to buy a car.

"If we do decide to propose a redress scheme, we'll consult widely. In designing a redress scheme, as we have previously said, we will balance principles including fairness, timeliness, and certainty."

The spokesperson added: "We welcome that the Supreme Court has clarified the law and are grateful to the Court for delivering the judgment after the market closed."

Lord Reed, president of the Supreme Court, said it had taken note of the FCA's concerns for any stock market disruption cause by its landmark judgement and therefore it had agree to, unusually, deliver its judgement late on Friday after the markets had ended trading for the weekend.

The FCA spokesperson concluded: "We want to bring greater certainty for consumers, firms and investors as quickly as possible."