The Financial Conduct Authority (FCA) has proposed to extend the deadline for lenders to handle complaints surrounding motor finance agreements involving non-discretionary commission arrangements.
Under the proposals, affected firms will have to either May 31, 2025, or December 4, 2025, to provide final responses to motor finance complaints.
This move follows a Court of Appeal judgment requiring dealers to disclose commission details to customers, ensuring informed consent.
Lenders including Close Brothers Group PLC (LSE:CBG) and Lloyds Banking Group PLC (LSE:LLOY) face potentially billions of pounds in compensation claims following the ruling.
The scale of the claims could rival that of the PPI scandal, according to some analysts.
Commenting on the proposed deadline extension, Nikhil Rathi, chief executive of the FCA, stated: "The Court of Appeal’s ruling means many customers who bought a car using finance through a dealer could be owed compensation.
“We want to make sure that consumers who are owed money get it in an orderly way, and that the motor finance market continues to provide competitive deals for the millions of people that rely on it."
“Firms will need to use the additional time provided to ensure they have the resources to investigate and issue final responses to complaints at the end of the proposed extension.”
Close Bros today said it will appeal the FCA ruling on motor finance to the Supreme Court.
These proposed deadline extensions are intended to provide the Court enough time to decide on whether to green light the appeal.