The Financial Conduct Authority (FCA) has provided a crucial update on its ongoing motor finance review, which could have significant implications for consumer credit firms. The review focuses on discretionary commission arrangements (DCAs) and whether firms failed to meet regulatory standards—potentially leading to financial harm for consumers.
Key Developments
Supreme Court Appeal (1-3 April 2024)
The Supreme Court is set to hear an appeal following a Court of Appeal ruling on the proper disclosure of commission arrangements. The outcome could reshape how firms handle commissions and consumer redress.
FCA’s Active Involvement
The FCA has filed a formal submission in the case to help clarify the legal position for both firms and consumers. This signals the regulator’s firm stance on ensuring transparency and fairness in motor finance.
Potential Redress Scheme
If the Supreme Court confirms widespread failings, the FCA may consult on an industry-wide redress scheme. Firms could face significant financial exposure if compensation is required for affected consumers.
What This Means for Consumer Credit Firms
- Regulatory scrutiny will increase – Firms should prepare for potential policy changes and stricter compliance expectations.
- Proactive consumer engagement is key – Firms should review past commission practices and assess whether they meet transparency standards.
- Potential compensation risks – If redress is required, firms must be ready to engage with affected consumers fairly and promptly.
With the FCA aiming to provide certainty and clarity, consumer credit firms should closely monitor developments and ensure they remain compliant.
Click here to read more from the FCA’s statement.
