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

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

Whereas on the insurance coverage facet there have been 4,036 complaints about automobile/motorbike insurance coverage. These are the very 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 vehicles, 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 automobiles.

Abby Thomas, chief government and chief ombudsman of the Monetary Ombudsman Service, mentioned: “Shopping for a car will be pricey and worrying, and we’re now additionally more and more listening to from individuals frightened about whether or not they pays their finance offers.

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

The complaints information 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, prices and fee.

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

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

Floodgates may open for ‘the following PPI’

No win no charge agency Bott and Co mentioned it has been suggested that the FOS will launch the primary closing binding resolution on investigations it has been holding during the last three years into the misselling of motor finance.

In response to Bott and Co: “A call is predicted earlier than Christmas or within the early a part of January.” It believes the misselling of motor finance could possibly 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 mentioned: “The place we now have recognized issues by our findings, we’ll comply with up with the person companies.

“The place obligatory, we might think about supervisory or enforcement motion. We might also ask companies to report back to us on progress in addressing points.”

A spokesperson for Bott and Co mentioned this FOS investigation, prompted by the rise in complaints and work the FCA has carried out, “may 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 assert compensation extra simply”.

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

FOS informed AM it could not remark on particular person circumstances and was not in a position to give info on a timeline when a choice on investigations can be launched.

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

The dealer may then successfully set the rate of interest and the FCA discovered that the widespread use of this sort of fee created an incentive for brokers to behave in opposition to prospects’ pursuits.

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