The Monetary Ombudsman Service (FOS) has has recorded the best ever quantity of complaints over the past 5 years for shopper credit score motor finance associated points.

New knowledge for Q2 2023 exhibits 4,622 complaints about rent buy (motor) and 1,569 complaints about conditional sale (motor).

Whereas on the insurance coverage aspect there have been 4,036 complaints about automobile/motorbike insurance coverage. These are the best criticism ranges the Monetary Ombudsman has obtained for all three particular person merchandise in over 5 years.

Collectively this has meant that disputes arising from each the financing and insuring of individuals’s automobiles, bikes and caravans reached 11,869 complaints.

Comparatively in the identical interval the 12 months earlier than, there have been 6,744 complaints to the Ombudsman about points associated to motor autos.

Abby Thomas, chief govt and chief ombudsman of the Monetary Ombudsman Service, stated: “Shopping for a automobile could be pricey and anxious, and we’re now additionally more and more listening to from individuals nervous about whether or not they will pay their finance offers.

“What’s clear is that regardless of the perceived challenge, corporations want to make sure they’re treating clients with transparency and equity.”

The complaints knowledge exhibits that many automobile finance settlement claims are being submitted by skilled representatives.

Altogether they account for greater than 90% of circumstances associated to unaffordable or irresponsible lending, and 70% of complaints about charges, fees and fee.

Nevertheless, the uphold fee for these motor finance complaints introduced by skilled representatives was notably low at simply 8%, in comparison with a 42% uphold fee when circumstances in the identical class have been introduced immediately by customers.

This fee can also be a lot decrease than the 35% uphold fee for basic complaints introduced by skilled representatives throughout all classes throughout the identical time interval.

Floodgates might open for ‘the following PPI’

No win no charge agency Bott and Co stated it has been suggested that the FOS will launch the primary last binding determination on investigations it has been holding over the past three years into the misselling of motor finance.

In line with Bott and Co: “A choice is anticipated earlier than Christmas or within the early a part of January.” It believes the misselling of motor finance may very well be the following Fee Safety Insurance coverage (PPI) scandal.

In March 2019 the Monetary Conduct Authority launched a report detailing the findings of an investigation it had been finishing up for a number of years, in relation to the motor finance sector.

On the time, the FCA stated: “The place we now have recognized issues by our findings, we’ll comply with up with the person corporations.

“The place essential, we might contemplate supervisory or enforcement motion. We may additionally ask corporations to report back to us on progress in addressing points.”

A spokesperson for Bott and Co stated this FOS investigation, prompted by the rise in complaints and work the FCA has completed, “might set a precedent on how tens of millions of comparable motor finance complaints needs to be dealt with by lenders and will then open the floodgates for tens of millions of customers to say compensation extra simply”.

The agency estimates that tens of millions of customers have already been overcharged on account of fee preparations earlier than they have been ultimately banned by the Monetary Conduct Authority from January 28, 2021.

Earlier than the ban, some automobile retailers and motor finance brokers obtained fee linked to the rate of interest that clients pay – creating an incentive to promote costlier credit score to some clients.

The dealer might then successfully set the rate of interest and the FCA discovered that the widespread use of the sort of fee created an incentive for brokers to behave towards clients’ pursuits.

The FCA estimated on the time that the ban would save clients £165 million a 12 months.