Car Finance Consumer Rights and Protections: Key Takeaways from CP24/15 for Complaints

Car Finance Consumer Rights and Protections: Key Takeaways from CP24/15 for Complaints

It is crucial to understand your rights as a consumer, especially as navigating the auto finance sector can be challenging. The Financial Conduct Authority (FCA) seeks to make the industry more equitable for customers through its various initiatives to create a transparent and fair car purchasing protocol. Its Consultation Paper 24/15 (CP24/15) makes significant changes in the regulatory framework to address car finance issues.

One important component of UK law that establishes the framework for consumer protection is the Consumer Rights Act of 2015. This law mandates that all sold items must adhere to a set of quality requirements, particularly when it comes to function, safety, and accurate marketing. This law covers the purchase of vehicles, including contract terms or business practices. 

Your Rights When Financing a Car

As a car buyer, one of the most sustainable ways to acquire a vehicle is through motor financing, which is often readily available at dealerships. This makes accessing funds to purchase a car more reachable. However, it is essential to exercise your rights before signing any contract, especially with the ongoing investigations on commission arrangements which may be harmful to consumers. 

Under the Financial Services Compensation Scheme, the FCA is constantly working to protect consumer rights and uphold firms’ fiduciary duties. Motor firms are mandated to deliver goods and services that satisfy the needs of their clients while maintaining fairness, transparency and adequate assistance throughout the whole financing process. 

Your right to file a car personal contract purchase (PCP) claim is protected by the FCA, which you can tap into if you are mis-sold a car finance product. 

What is CP24/15?

The FCA introduced CP24/15 as a series of measures aimed at addressing vulnerabilities in the motor finance sector, with particular emphasis on DCAs, after deciding to ban them in January 2021. However, the surging grievances aired by customers to official agencies remain persistent, with the Financial Ombudsman Service (FOS) reporting thousands of additional complaints filed this year compared to last year within the same period. 

The document seeks to provide an additional extension to the already delayed timetable for firms to issue final responses. The pause was implemented in January 2024, with the goal of giving companies more time to assess and decide. Whereas finance providers usually had 8 weeks to respond, they now have more time to assess and decide. CP24/15 aims to further move the deadline to either 31 May 2025 or 4 December 2025. 

Another notable change is that it gives drivers up to 15 months to escalate complaints to the FOS. 

Why Does CP24/15 Matter?

The FCA conducted a cost-benefit analysis of the proposals, arriving at the conclusion that they offer more advantages than the opposite. One of the most favourable impacts of the proposed modifications is market stability. 

According to the agency, prioritising efficient complaint resolution enables it to increase the credibility of the motor finance sector. This is bolstered by another expected outcome, which is enhanced customer results. Per the FCA, the extended timeframe allows it to evaluate the impact of DCAs at a deeper scale, helping it gain more insights as to the appropriate compensation for customers. Lastly, the proposals are expected to reduce administrative expenditure by £65 million.

Aside from the benefits to the agency itself, the changes are designed to increase consumer protection while minimising financial strain on financial providers in the long run, particularly for smaller firms. The extension might seem detrimental to some extent, as it urges consumers to wait until December 2025 before filing with the FOS, but the main goal is to ensure that they receive resolutions that have been thoroughly considered.  

The watchdog is also intent on keeping a careful eye on the status of complaints and the process they went through until resolution with the help of the FOS. To this end, firms are urged to keep records of their cases as well. 

Final Thoughts

The recent changes to car finance regulations emphasise the role consumer rights and protections play in achieving fairness and stability in the motor market. With the help of CP24/15, the FCA creates an equitable market that addresses long-standing issues and enables forward-looking policy frameworks.