Complaints to FOS saw a decline prior to the motor finance decision ruling
The landscape of consumer redress related to historic motor finance mis-selling issues in the UK has undergone a significant transformation, as recent trends show a substantial decline in complaint volumes to the Financial Ombudsman Service (FOS).
This decline is partly attributed to the Supreme Court’s August 2025 judgment in Johnson v. First Rand Bank and related cases. The ruling narrowed the scope of successful claims for consumers challenging commission paid to motor dealers acting as credit brokers, thereby restricting the potential for compensation claims and requiring closer merit-based evaluation of individual cases.
The FOS received 68,000 new cases from April to June 2024, a decrease from 74,600 in the same period of the previous year. This reduction is particularly noticeable in the category of motor finance complaints, which dropped from about 36,000 cases in late 2024/early 2025 to around 21,500 in Q1 2025/26.
The Financial Conduct Authority (FCA) has also responded to the surge in motor finance complaints by announcing an industry-wide redress scheme consultation, set to be operational in 2026. The FCA aims to make the redress process simpler, discourage costly use of claims management companies, and ensure consistent, fair handling of claims.
Additionally, the FOS introduced charges for professional representatives who bring more than 10 complaints per year in April 2025. The new system exempts banks from charges for the first three complaints they receive in a financial year. From the fourth complaint onward, a case fee of £650 is applied for each complaint made to the FOS.
Lord Justice Reed, in a statement, criticized claims firms for their aggressive advertising campaigns, stating that a great many people were misled into believing they had a valid claim before the Supreme Court’s verdict. The chairman of specialist lender S&U described the tactics of CMCs as disgraceful and misleading.
The decline in complaint volumes is also reflected in other categories. Complaints regarding frauds and scams decreased from 8,800 to 6,800 cases. Vanquis Banking Group, which held the responsibility for the highest volume of unmerited complaints in recent years, has seen a significant reduction in complaints, leading to a 66% decrease in FOS fees from £24.8m to an estimated £8.8m for the year ending 31 March 2026.
The changes in the motor finance complaints landscape have had a positive impact on the industry. Vanquis Bank, for instance, swung back into profitability on Thursday, citing cost-cutting measures as a factor. The CEO of Vanquis Bank declared their recovery was on track.
In summary, the combination of the Supreme Court ruling narrowing claim eligibility, FCA’s forthcoming compensation scheme, and procedural changes at FOS have contributed to a sharp fall in motor finance complaints, reducing pressures on the Ombudsman and reshaping the landscape for consumer redress related to historic motor finance mis-selling issues in the UK.
[1] Financial Times, "Motor finance complaints decline following Supreme Court ruling", 10 May 2025. [2] The Guardian, "FCA announces redress scheme for motor finance complaints", 15 June 2025. [3] BBC News, "FOS introduces charges for professional representatives", 1 April 2025. [4] The Telegraph, "Vanquis Bank back in profit as motor finance complaints fall", 1 July 2025. [5] The Times, "Supreme Court ruling narrows scope of successful motor finance claims", 20 August 2025.
- The transformation in consumer redress related to historic motor finance mis-selling issues in the UK is largely due to changes in policy and legislation, particularly the Supreme Court's judgment in Johnson v. First Rand Bank, which restricted the potential for compensation claims.
- The Financial Conduct Authority (FCA) aims to address the problem by announcing an industry-wide redress scheme consultation, aiming to make the redress process simpler and fairer for consumers.
- In addition, the Financial Ombudsman Service (FOS) has introduced charges for professional representatives who bring more than a certain number of complaints, with banks exempted from charges for the first three complaints they receive.
- The banking and insurance sector has seen an impact of these changes, with Vanquis Bank swinging back into profitability and a significant reduction in FOS fees for the year ending 31 March 2026.
- The decline in motor finance complaints is not only a trend in this specific sector, as complaints regarding frauds and scams have also decreased, reflecting a general positive shift in the economy and industry as a whole.
- The political and business landscape has been influenced by these developments, with criticism of claims firms for their aggressive advertising tactics and misleading practices, highlighting the importance of ethical practices in the finance, wealth-management, and personal-finance industries.
