Internal Complaints Procedure for Host Car Finance

1. Introduction and Policy Statement

HOST CAR FINANCE are credit brokers and not lenders. This document articulates Host Car Finance’s comprehensive internal complaints handling procedure, meticulously designed to ensure that all expressions of dissatisfaction from customers are addressed promptly, fairly, and consistently. The procedure applies to every complaint received by Host Car Finance, irrespective of the channel through which it is submitted. It meticulously outlines the steps from the initial receipt of a complaint through to its ultimate resolution, including internal escalation pathways and options for external referral. The establishment of such a policy is crucial for ensuring that staff uniformly identify and address complaints, fostering a consistent approach across all departments.

Host Car Finance is steadfast in its commitment to treating customers fairly, ensuring that no post-sale barriers impede their ability to voice concerns. Staff members are thoroughly trained to assist customers in making complaints, guaranteeing they receive the same high level of service as any other customer. The objective is to resolve complaints as swiftly as possible, ideally within three business days where feasible, and to keep complainants informed throughout the entire process.

This procedure is fully compliant with the Financial Conduct Authority’s (FCA) Dispute Resolution: Complaints Sourcebook (DISP) and aligns seamlessly with the principles and expectations of the Financial Ombudsman Service (FOS). Adherence to these regulations is not merely a legal obligation but forms the bedrock of Host Car Finance’s dedication to consumer protection and maintaining market integrity.

A robust and well-executed complaints procedure, while mandated by regulatory bodies, transcends a mere compliance exercise; it transforms into a strategic asset. By proactively identifying and addressing issues, Host Car Finance elevates its approach beyond basic regulatory adherence. This proactive stance is essential for effective risk management, safeguarding the company’s reputation, and cultivating deeper customer trust and loyalty within the competitive car finance market. The process shifts from being a “must-do” to a “should-do” that yields tangible business benefits.

Furthermore, the complaints procedure serves as a vital, real-time feedback system. It offers unfiltered insights into potential product flaws, service delivery gaps, and operational inefficiencies that might otherwise remain undiscovered. Each complaint, therefore, is not just an individual issue to be resolved but a valuable piece of actionable intelligence. This means that the complaints team should not operate in isolation but rather be intrinsically integrated into processes such as product development, marketing strategy, and operational reviews, ensuring that customer feedback directly informs business improvements.

2. Defining and Receiving Complaints

Host Car Finance adopts a comprehensive definition of a complaint to ensure thorough capture and resolution. A complaint is broadly defined as “any oral or written expression of dissatisfaction, whether justified or not, from, or on behalf of, a person about the provision of, or failure to provide, a financial service, claims management service or a redress determination, which alleges that the complainant has suffered (or may suffer) financial loss, material distress or material inconvenience”. This expansive definition is critical as it ensures that all relevant communications indicating dissatisfaction are captured and addressed, preventing a narrow interpretation that might overlook complaints not explicitly using the word “complaint”. It also extends to communications from potential customers, not just existing ones, broadening the scope of captured feedback.

Complaints can be submitted through any reasonable means, free of charge, as mandated by regulatory requirements. This includes:

• In writing: By post to, or via email to.
• By telephone: It is ensured that call charges for complaint lines do not exceed the basic rate.
• In person:
• Digital channels: Including social media, where appropriate communications expressing dissatisfaction are identified. Complainants are encouraged to provide as much detail as possible to facilitate a swift and thorough investigation.

Upon receipt, all complaints, whether verbal or written, are promptly logged into a centralized complaint tracking system. Acknowledgment of the complaint is issued as soon as possible, and in any event, no later than five working days of receipt. Host Car Finance aims to acknowledge complaints within 48 working hours, reflecting industry best practices. The acknowledgment confirms receipt and provides details of the complaints procedure.

The broad definition of a complaint is not merely a matter of regulatory compliance; it functions as a critical first line of defence against systemic issues. By capturing all forms of dissatisfaction, Host Car Finance can identify subtle early warning signs of potential consumer harm or regulatory breaches, such as unfair or deceptive acts or practices (UDAP) or discrimination, before they escalate. This comprehensive capture allows for early intervention and mitigation of potential harm, underscoring the necessity for staff training to recognise these broader expressions of dissatisfaction.

Furthermore, offering multiple, easily accessible complaint channels (e.g., phone, email, social media) goes beyond simple compliance. This multi-channel approach directly contributes to an improved customer experience by reducing effort and potential frustration during the complaint process. Different channels may attract diverse types of feedback or cater to various demographic segments, providing Host Car Finance with a richer and more varied dataset on customer pain points. This comprehensive data can then be leveraged for more effective root cause analysis and continuous service improvement.

3. Complaint Investigation and Resolution Process

Upon acknowledging a complaint, the designated Complaints Handler conducts an initial assessment to understand the issue from the customer’s perspective. If the complaint can be resolved to the customer’s satisfaction by the close of the third business day following receipt, a “Summary Resolution Communication” is issued. This communication details the outcome and findings. Prompt action to resolve complaints immediately, where possible, is encouraged as it is the first step in regaining customer trust.

For complaints requiring more extensive investigation (beyond three business days), a thorough process is initiated. This includes:

• Understanding the Complaint: Clearly defining the problem and the specific products or services involved.
• Information Gathering: Collecting all relevant files, correspondence (letters, emails), statements, incident notes, and records of meeting or telephone calls.
• Internal Collaboration: Sharing details with relevant colleagues or departments (e.g., sales, operations, compliance) who can provide assistance or insights. If the complaint involves a specific team member, that employee is not involved in handling the complaint to maintain impartiality.
• Chronology of Events: Documenting the sequence of events that led to the complaint.
• Identifying Disputes: Pinpointing any areas of disagreement between the customer and Host Car Finance.
• Third-Party Involvement: Checking the status of any third parties involved, while being mindful of confidentiality and privacy considerations.

All complaints are assessed fairly, consistently, and promptly. This assessment determines the subject matter of the complaint, whether it should be upheld, and what remedial action or redress (or both) may be appropriate. The assessment also considers whether another party, such as a car dealer, may be solely or jointly responsible for the matter alleged in the complaint. Redress and compensation are determined on an individual basis, taking into account all aspects of the complaint and any suffering caused to the customer. The general principle for redress is to restore the complainant to the position they would have been in had the problem not occurred.

Host Car Finance maintains constant communication with the complainant throughout the investigation, providing updates on the progress, ideally at least once a week. All communication is clear, fair, and not misleading.

A detailed Final Response Letter is issued within eight weeks of receiving the complaint. This letter includes:

• A summary of the complaint.
• Details of the investigation undertaken.
• The outcome and findings (acceptance or rejection of the complaint).
• Information on any redress offered and agreed upon.
• Clear information about the complainant’s right to refer the matter to the Financial Ombudsman Service (FOS) if dissatisfied, including FOS contact details (e.g., Phone: 0800 023 4567, Website: www.financial-ombudsman.org.uk) and an explanatory leaflet.

In the unlikely event that a final response cannot be provided within eight weeks, a holding letter is sent. This letter explains the reasons for the delay, provides an indication of when a final response can be expected, and reiterates the complainant’s right to refer the complaint to the FOS.

The emphasis on prompt acknowledgment, regular updates, and clear communication throughout the investigation process is fundamental. A timely response demonstrates commitment to resolving the issue, which is the initial step in rebuilding a client’s trust. This consistent and transparent communication directly correlates with improved customer satisfaction, even when a complaint is not fully upheld, and significantly reduces the likelihood of escalation to the FOS. Conversely, a lack of communication or perceived delays can exacerbate customer frustration, making the resolution process more challenging and increasing the burden on both Host Car Finance and the FOS.

The ability to resolve a complaint within three business days, known as the “Summary Resolution Communication,” is a specific regulatory provision. This provision encourages swift, efficient resolution of straightforward issues. From a business perspective, it reduces the overhead associated with prolonged investigations and prevents minor grievances from escalating into more significant problems. Host Car Finance’s investment in empowering frontline staff with the necessary training and authority to resolve simple complaints on the spot is crucial. This requires clear guidelines on what constitutes a “simple” complaint and appropriate redress limits, along with robust initial assessment training to quickly identify complaints suitable for summary resolution versus those requiring a full investigation. This approach optimizes resource allocation and enhances the customer experience.

The policy of ensuring that an employee about whom a complaint is made is not involved in handling that complaint is vital for the integrity and perceived objectivity of the complaints process. This practice prevents conflicts of interest and enhances the credibility of the investigation in the eyes of the complainant and external bodies like the FOS. It reinforces Host Car Finance’s commitment to impartiality and fair outcomes, which is paramount for successful complaint resolution and minimizing FOS intervention. This also necessitates adequate staffing and training within the complaints team to manage such situations without relying on the implicated individual.

To provide a clear reference for both internal staff and customers regarding the expected pace of the complaints process, the following table outlines the key timelines:

Table: Complaint Handling Timelines

This table operationalizes the time-bound requirements of DISP, making them easily digestible and actionable for the complaints team. It also serves as a checklist for compliance monitoring, helping to mitigate the risk of missed regulatory deadlines which could lead to enforcement action or automatic FOS referral rights for the customer.

4. Escalation and External Referral

Host Car Finance establishes a clear internal escalation matrix to ensure that complaints are handled at the appropriate level of expertise and seniority. This matrix guarantees that complex or high-risk issues are promptly brought to the attention of relevant management.

The matrix defines:

• Escalation Triggers: Criteria for when an issue should be escalated, such as an inability to resolve within a certain timeframe, specific issue complexity, potential for significant financial loss or reputational damage, or a direct customer request for escalation.
• Escalation Levels: Clearly defined tiers of responsibility, including Initial Handler, Senior Handler/Supervisor, Head of Department/Compliance, and Executive Management.
• Responsible Parties: Specific roles or individuals assigned to each level.
• Expected Resolution Timelines (SLAs): Target response and resolution times for each escalation level.
• Communication Protocols: Guidelines on how information is relayed internally and to the customer during the escalation process.

The matrix incorporates hierarchical escalation, where a ticket is escalated based on seniority and experience; functional escalation, directing a ticket to the team with the precise skill set (e.g., finance team for payment issues); and priority-based escalation for urgent or critical issues.

If a complainant remains dissatisfied with Host Car Finance’s final response, or if a final response is not issued within eight weeks of the complaint date, they are entitled to refer their complaint to the Financial Ombudsman Service (FOS). The FOS is an independent and free service. Host Car Finance’s final response letters and holding letters prominently include the FOS contact details (e.g., Phone: 0800 023 4567, Website: www.financial-ombudsman.org.uk) and an explanatory leaflet.

Complainants are advised to refer their case to the FOS as soon as possible after receiving the final response, and certainly within six months. The FOS retains discretion to review complaints outside this period. It is important that complainants allow Host Car Finance to complete its internal complaints procedure before referring concerns to the FOS.

For complaints related to Discretionary Commission Arrangements (DCAs) in motor finance, specific temporary rules apply. If a complaint falls under these temporary rules (e.g., motor vehicle finance before 28 January 2021, complaint made between 17 November 2023 and 4 December 2025, or final response received between 12 July 2023 and 29 January 2026), Host Car Finance may have more time to respond. In such cases, the complainant will also have longer than the usual six months to bring their complaint to the FOS (until 29 July 2026). Host Car Finance informs complainants if these temporary rules apply to their specific case.

The escalation matrix, beyond being a procedural tool, serves as a dynamic mechanism for knowledge management and skill development. By tracking which types of complaints escalate and at what level, Host Car Finance can gather data on the underlying reasons for escalation. This data then informs targeted training programs to address skill gaps in frontline staff, whether in specific product knowledge, de-escalation techniques, or problem-solving. This continuous learning approach helps identify systemic issues that require senior management attention, thereby preventing repetitive escalations and fostering a culture of continuous improvement.

While the FOS acts as a crucial safety net for consumers, frequent FOS referrals can signal deficiencies in a firm’s internal processes. The Financial Conduct Authority explicitly warns that “Failure to undertake complaint handling in the appropriate way, or failing to assist the Ombudsman, can lead to the FCA taking enforcement action against your firm”. This represents a significant regulatory and reputational risk. Effective internal complaint resolution, characterized by thorough investigation, fair assessment, and appropriate redress, directly reduces the volume of complaints escalated to the FOS. This, in turn, mitigates regulatory risk, reduces operational costs associated with FOS engagement, and protects the firm’s reputation. The FOS’s general approach of putting the complainant back in the position they would have been in also implies that if Host Car Finance does not offer adequate redress, the FOS will, potentially incurring additional costs for the firm.

The specific, temporary rules for DCA complaints highlight the dynamic nature of regulatory requirements. The FCA can introduce specific measures in response to emerging market issues, as seen with the FCA’s press release on DCA in April 2024. This underscores the necessity for Host Car Finance to maintain a proactive regulatory intelligence function. Continuous monitoring of FCA publications, industry guidance, and FOS pronouncements is essential to ensure that the internal complaints procedure remains compliant and effective, adapting to new challenges and consumer protection initiatives. This proactive stance is crucial for navigating complex and evolving regulatory landscapes.

The following table provides a clear roadmap for internal staff on how to escalate issues, ensuring that complex or sensitive complaints are handled by individuals with the appropriate authority and expertise. This promotes efficiency, accountability, and consistent handling of escalated cases, reducing bottlenecks and improving overall resolution rates. It also serves as a training tool and a basis for performance evaluation within the complaints team.

Table: Internal Complaint Escalation Matrix

5. Specific Complaint Categories in Car Finance

Host Car Finance recognises that complaints in the car finance sector often fall into specific categories, each requiring tailored handling.

Handling Affordability Complaints

Affordability complaints arise when a customer alleges that the car finance agreement was unaffordable at the time of sale or has become unaffordable due to an inadequate assessment by Host Car Finance. This category includes situations where customers struggle with monthly payments, incur other debt to prioritize car repayments, or find themselves unable to afford balloon payments at the end of a Personal Contract Purchase (PCP) agreement.

Initial handling guidance for these complaints involves a thorough review of the initial affordability assessment conducted at the point of sale. It is crucial to assess the customer’s financial circumstances at the time the agreement was made and any subsequent significant changes. The assessment focuses on whether the loan was affordable, meaning the customer could make repayments on time without hardship, while still meeting other financial commitments. Where appropriate and compliant with regulatory guidance, Host Car Finance explores potential solutions such as renegotiating loan terms, offering deferred payments, or modifying payment plans.

Addressing Discretionary Commission Arrangement (DCA) Complaints

DCA complaints allege that the customer was not informed about a discretionary commission arrangement between Host Car Finance (or the finance provider) and the car dealer, which potentially led to higher interest rates or less favorable terms for the customer.

Initial handling guidance for DCA complaints requires Host Car Finance to confirm whether the specific car finance agreement involved a DCA, even if no formal data subject access request was made. It is essential to acknowledge the FCA’s ongoing investigation into historical DCAs and the temporary complaint-handling rules that apply. Host Car Finance informs the complainant if their case falls under these temporary rules, which may extend response times for the firm and referral times for the FOS. The firm prepares for potential FOS involvement, noting that the FOS may set out key facts but will not assess the complaint until related court cases are resolved.

Managing Vehicle Condition-Related Complaints

Vehicle condition-related complaints primarily concern the condition or fitness for purpose of the vehicle itself, rather than the finance agreement terms.

Initial handling guidance directs the complainant to liaise with the vehicle seller (e.g., car dealer) in the first instance, as the seller typically bears primary liability for vehicle condition. Host Car Finance clarifies that if the complaint is solely about the vehicle’s condition and not the finance agreement, it may fall outside the direct scope of its financial services complaint procedure and might be better addressed by the Motor Ombudsman or consumer rights legislation. However, if the vehicle condition complaint is intrinsically linked to the finance agreement (e.g., misrepresentation during the sale leading to finance for a faulty vehicle), Host Car Finance investigates its role in any potential mis-selling.

Complaints Regarding Lack of Clarity on Costs or Contract Terms

These complaints arise when customers allege that the costs, charges, or terms of their car finance agreement (e.g., mileage limits, damage charges, PCP balloon payments, hidden extras) were not clearly explained or were misleading.

Initial handling guidance involves reviewing all pre-contract information, disclosure documents, and the finance agreement itself to ascertain what information was provided and how it was communicated. The assessment determines whether the explanation was sufficient for the customer to make an informed decision, especially considering the complexity of products like PCP. It also investigates if any “surprise” or “disproportionate” charges were applied without adequate prior disclosure.

The systematic classification of common complaint types allows Host Car Finance to proactively identify systemic mis-selling risks. Complaints regarding “Lack of affordability checks” and “Undisclosed Discretionary Commission Arrangements” often indicate broader issues within sales processes or product design, rather than isolated incidents. The FCA mandates that firms “must put in place appropriate management controls… identifying and remedying any recurring or systemic problems”. This means that Host Car Finance should not just resolve individual complaints but use the data from these common complaint types to conduct targeted internal audits and reviews of its sales practices, training materials, and commission structures. This proactive approach allows for the identification and rectification of underlying mis-selling risks before they generate a large volume of complaints, thereby preventing significant financial and reputational damage, similar to the widespread Payment Protection Insurance (PPI) scandal.

A nuanced understanding of the interconnectedness between finance and vehicle condition complaints is also crucial. While the Motor Ombudsman may not consider complaints solely about the finance company or the sale of finance , “Faulty or unsatisfactory vehicle” is a recognized car finance complaint type. This highlights that while the finance company is not responsible for the car’s mechanical integrity, its role becomes relevant if the finance was sold based on a misrepresentation of the vehicle’s condition. Host Car Finance needs clear internal guidelines to differentiate between a pure vehicle defect (primarily the seller’s responsibility) and a finance mis-selling claim arising from vehicle issues. For instance, if a customer was misled about a car’s history, leading them to take out finance they would not have otherwise, the finance company may bear a responsibility. This requires careful investigation and potential collaboration or referral to the car dealer while maintaining oversight of the finance aspect.

The following table serves as a practical guide for frontline staff and complaints handlers to quickly categorize incoming complaints and understand the immediate steps and considerations for each type. It ensures consistency in initial assessment and helps in routing the complaint to the most appropriate internal resources. By standardizing the initial approach, it improves efficiency and reduces the risk of mismanaging common complaint scenarios.

Table: Common Car Finance Complaint Types and Initial Handling Guidance

6. Management Oversight and Continuous Improvement

Host Car Finance ensures robust management oversight of its complaints procedure by appointing a designated individual to have overall responsibility for the firm’s compliance with DISP. This individual must hold an FCA governing function or be of appropriate seniority. While their name is not required to be notified to the FCA, it must be provided promptly upon request. This clear accountability mechanism is fundamental to the effectiveness of the complaints procedure.

Host Car Finance implements appropriate management controls and takes reasonable steps to identify and remedy any recurring or systemic problems revealed through complaints. This includes:

• Analysing Causes: Systematically analysing the causes of individual complaints to identify root causes common to types of complaints.
• Broader Impact Assessment: Considering whether such root causes may affect other processes or products, including those not directly complained of.
• Correction and Remediation: Correcting identified root causes where reasonable to do so.
• Proactive Redress: Ascertaining the scope and severity of consumer detriment and considering proactive redress or remediation exercises, which may involve contacting customers who have not complained. Regular Root Cause Analysis (RCA) workshops are conducted to establish potential weaknesses in the business and prevent recurrence of similar issues.

All staff involved in complaint handling receive appropriate regulatory training. This training covers understanding the complaints procedure and its regulatory importance , identifying and broadly defining complaints , active listening, empathy, and de-escalation techniques , problem-solving skills, and knowing when and how to escalate issues. Specific guidance on common car finance complaint types, such as affordability, DCA, and vehicle condition, is also provided. Staff competence is regularly reviewed to ensure ongoing effectiveness.

Host Car Finance regularly monitors key performance indicators (KPIs) related to complaint handling to ensure the efficiency, quality, and speed of support interactions. Relevant KPIs include:

• Complaint Volume: The total number of complaints received.
• First Contact Resolution (FCR) Rate: The percentage of complaints resolved in the first interaction.
• Average Resolution Time: The average time taken to resolve complaints.
• Complaint Uphold Rate: The percentage of complaints upheld.
• FOS Referral Rate: The number or percentage of complaints escalated to the FOS.
• Customer Satisfaction (CSAT) Score: A metric measuring customer happiness with the support experience.
• Root Cause Identification Rate: The percentage of complaints where a root cause is successfully identified.
• Reopened Ticket Rate: The percentage of closed tickets that need to be reopened due to incomplete resolution.
• Issue Escalation Rate: How often complex issues are escalated to higher tiers.

The complaints policy and procedure are reviewed at least annually, with all changes approved by directors.

7. Conclusion

The establishment of a comprehensive and robust internal complaints procedure is paramount for Host Car Finance, not only to meet its regulatory obligations under the FCA’s DISP rules but also to foster a culture of continuous improvement and customer centricity. The analysis demonstrates that a well-defined complaints process, from broad definition and multi-channel reception to structured investigation, clear escalation, and diligent oversight, yields significant benefits.

By viewing complaints not merely as isolated incidents but as valuable feedback, Host Car Finance can proactively identify and address systemic weaknesses in its products, processes, and training. This proactive approach, driven by thorough root cause analysis and informed by key performance indicators, mitigates regulatory risks, enhances operational efficiency, and strengthens customer trust and loyalty. The ability to swiftly resolve straightforward complaints, coupled with transparent communication throughout the process, significantly reduces the likelihood of external escalation to the Financial Ombudsman Service, thereby safeguarding the firm’s reputation and financial well-being.

The dynamic nature of the car finance landscape, exemplified by specific temporary rules for Discretionary Commission Arrangement complaints, underscores the need for continuous regulatory intelligence and adaptability. Host Car Finance’s commitment to ongoing staff training and a clear escalation matrix ensures that complex issues are handled by appropriate expertise, fostering both internal learning and consistent customer outcomes. Ultimately, a meticulously managed complaints procedure transforms a regulatory necessity into a strategic advantage, driving sustainable growth and reinforcing Host Car Finance’s position as a responsible and trustworthy provider in the market.