The Financial Conduct Authority (“FCA”) has extended the pause on handling motor finance complaints involving discretionary commission arrangements (DCAs) until at least December 4, 2025. This decision stems from ongoing analysis and a judicial review involving Barclays Partner Finance, impacting the overall assessment of DCAs. The FCA aims to propose next steps by May 2025, which could include consulting on a redress scheme.
Background and Purpose
On January 11, 2024, the FCA initiated a review to determine if motor finance customers were overcharged due to DCAs. The initial pause on complaint responses was introduced to prevent inconsistent and inefficient outcomes. The FCA has since been analysing data spanning 14 years, but faced delays due to firms’ data management issues.
Judicial Review and Data Analysis
The ongoing judicial review by Barclays Partner Finance concerning the Financial Ombudsman’s decision on a DCA complaint is crucial to the FCA’s review. The outcome of this review, along with other relevant court cases, will significantly influence the FCA’s next steps.
Extension of Complaint Handling Pause
The FCA proposes extending the current pause on the 8-week deadline for firms to respond to DCA-related complaints until December 4, 2025. This extension allows the FCA time to potentially design and consult on alternative complaint handling methods, such as a consumer redress scheme. If no such intervention is planned, the pause could end earlier, with firms resuming normal complaint handling.
Implications for Consumers and Firms
- Consumers: Despite the extended pause, consumers can still file complaints. The FCA proposes extending the timeframe for referring complaints to the Financial Ombudsman from 6 months to 15 months after the firm’s final response, ensuring consumers have ample time once the FCA announces its next steps.
- Firms: Firms must prepare for the possibility of a redress scheme and comply with the extended pause, maintaining engagement with the FCA’s ongoing review process.
The FCA’s review of motor finance DCAs is a critical effort to ensure consumer protection and market integrity. The extended pause provides the necessary time for thorough analysis and potential implementation of a redress scheme. Both consumers and firms should stay informed about the progress and upcoming announcements by the FCA.
You can read the FCA’s full update here.
