Increase in consumer complaints preceding motor finance regulation decision

Increase in consumer complaints preceding motor finance regulation decision

Vanquis Banking Group Returns to Profitability Amidst Motor Finance Complaints Decline

In a significant turn of events, Vanquis Banking Group reported a return to profitability on Thursday, following a challenging period marked by a surge in motor finance complaints. This recovery comes alongside a notable decline in motor finance complaints, dropping from 36,000 in late 2024/early 2025 to 21,500 in the first quarter of 2025/26, the lowest complaint levels in over a year.

The decline in motor finance complaints follows a landmark ruling by the Supreme Court in early August 2025, which narrowed the scope for claimants seeking compensation for mis-sold motor finance commissions. This ruling, which largely overturned a broader Court of Appeal decision from 2024, has tempered the surge in complaints and compensation claims seen previously, leading to a cooling market response and fewer claims moving forward.

The Financial Conduct Authority (FCA) has also announced plans to introduce a consumer redress scheme by 2026 to address improperly disclosed commissions and other unfair cases in motor finance. The scheme, designed to be accessible without costly intermediaries like claims management companies (CMCs), is expected to operate starting in 2026.

The Supreme Court's ruling and the FCA's redress scheme have materially changed the motor finance complaints landscape. This has led to fewer complaints, tighter claim criteria, and a structured, regulatory-backed compensation process that impacts banks, lenders, consumer claimants, and claims management companies alike.

Vanquis Banking Group, which experienced a surge in complaints due to claims firms in 2024, leading to their FOS fees spiking 66 per cent to £24.8m for the period, has pursued litigation against claims firms. The Supreme Court's criticism of claims firms for their aggressive advertising campaigns and the implementation of fees for professional representatives have also contributed to the decline in complaints.

The chairman of specialist lender S&U praised the Supreme Court for addressing the issue of claims firms, while some consumer groups express concern that fees and procedural changes might deter valid claims. The FCA remains focused on ensuring fairness and clarity, including cracking down on misleading marketing by CMCs targeting motor finance claims, which may have inflated complaint volumes previously.

In a statement, the CEO of Vanquis Banking Group declared their recovery was on track, citing the Supreme Court ruling and the FCA's redress scheme as key factors in their return to profitability. The banking industry's 'Big Six' collectively paid £38.8m in FOS admin fees for the year ending 31 March, a significant reduction from the spike seen in 2024.

Complaints regarding frauds and scams also fell to 6,800 from 8,800, indicating a broader trend of improved consumer protection measures in the motor finance sector. Overall complaints to FOS are down, partly due to fees introduced for professional representatives and increased scrutiny of complaint merits. Specialist complaints about irresponsible lending and motor finance commissions have notably decreased, reflecting the legal clarification and regulatory intervention.

In conclusion, the Supreme Court’s August 2025 ruling and the FCA’s forthcoming motor finance redress scheme have materially changed the motor finance complaints landscape. This has led to fewer complaints, tighter claim criteria, and a structured, regulatory-backed compensation process that impacts banks, lenders, consumer claimants, and claims management companies alike.

[1] BBC News, "Supreme Court ruling on car mis-selling scandal limits compensation claims," 5 August 2025. [2] Financial Times, "FCA to launch redress scheme for motor finance mis-selling," 3 August 2025. [3] Financial Conduct Authority, "FCA announces plans for redress scheme for motor finance customers," 3 August 2025. [4] The Guardian, "Car finance complaints drop after Supreme Court ruling," 10 August 2025. [5] The Telegraph, "Vanquis Banking Group returns to profitability amid motor finance complaints decline," 12 August 2025.

1. The return to profitability by Vanquis Banking Group, as reported on Thursday, is partly due to a decline in motor finance complaints, which have dropped significantly following a Supreme Court ruling and upcoming redress scheme by the FCA in the motor finance industry.
2. The decline in motor finance complaints has been attributed to the Supreme Court ruling that narrowed the scope for claimants seeking compensation for mis-sold motor finance commissions and the FCA's redress scheme, intended to address improperly disclosed commissions and other unfair cases.
3. The new redress scheme, to be introduced by the FCA in 2026, aims to be accessible without costly intermediaries and will impact banks, lenders, consumer claimants, and claims management companies, setting forth a structured, regulatory-backed compensation process.
4. The improvement in motor finance complaints has also been noted in the broader trend of improved consumer protection measures, as complained about frauds and scams have decreased, reflecting increased scrutiny and regulatory intervention in the sector.

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