The City watchdog has proposed pushing back the deadline for complaints about potential motor finance misselling.
The Financial Conduct Authority, which had already extended the final date to December next year, today said it plans to consult on putting a further extension in place for firms to respond to complaints and for consumers to refer issues to the Financial Ombudsman Service.
It follows last month's Court of Appeal decision that ruled car dealers offering loans to customers for car purchases were liable to potential compensation for mis-selling due to the way commissions were structured.
That judgment, the FCA said in a statement today, is likely to result in a high volume of complaints for motor finance firms, so the complaint extension "would allow them time to consider how these might be efficiently and effectively handled" and "help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market."
Off the back of the court decision, the regulator said it has spoken to 63 firms and discussed the implications with 'consumer representatives'.
As the two lenders involved in the legal cases, including FTSE 250-listed Close Brothers Group PLC (LSE:CBG), intend to appeal, the FCA said it will write to the Supreme Court to request a quick decision over whether it will give permission to appeal.
The proposed complaint extension will cover at least the period until the Supreme Court decides whether to grant permission to appeal, it said.
While Lloyds Banking Group PLC was not involved in the Court of Appeal case, it it thought by analysts to be the most exposed to motor finance in the banking sector.
If permission to appeal is granted, the FCA advised all motor finance firms to use the time to ensure "they have the resources to issue final responses to complaints at the end of a proposed extension", and should consider the size of financial provisions for paying potential redress.
However, this week the Court of Appeal refused Close Brothers' application to take its case to the Supreme Court.
An FCA review is still ongoing to understand if there was widespread misconduct before a 2021 ban was introduced and if consumers have lost out, how to best ensure appropriate compensation is made.
As the review continues, in September the watchdog extended its deadline to 4 December 2025 to allow motor finance firms time to provide final responses to complaints and for consumers to refer their complaints to the Ombudsman.
As well as the Court of Appeal judgment, the FCA said it is also expecting judgment shortly from a judicial review in October by Barclays Partner Finance of a Financial Ombudsman decision relating to motor finance commissions.