On 25 January 2024, the FCA published information for firms affected by its review into the historical use of discretionary commission arrangements (DCAs) in the motor finance industry.
The FCA announced earlier this month that it is using its powers under s166 of the Financial Services and Markets Act 2000 to review sales of historical motor finance commission arrangements across several firms. As part of this, it has introduced new rules that came into force on 11 January 2024, with the aim of ensuring that its approach to providing potential redress leads to the correct outcomes for consumers and the effective functioning of the motor finance market.
The webpage flags that the FCA is:
- Pausing, for 37 weeks, the requirement on firms to provide a final response to a complaint about motor finance agreements with DCAs within 8 weeks of receiving the complaint.
- Extending the time consumers have to refer DCA complaints to the Financial Ombudsman Service from 6 to 15 months, if the firm sent its final response to the complaint within the period specified in the rules.
Firms affected by these changes are reminded that they must ensure they comply with the rules in Appendix 5 of the Dispute Resolution: Complaints Sourcebook that are relevant to their business. The webpage goes on to provide further information and guidance on the requirements and expectations for firms.
Matthew Gregory, partner in our London Financial Services Group, commented: “The announcements by the FCA today have been much anticipated, following recent FOS decisions and the growing number of complaints received by firms around motor finance commissions which predate the FCA’s ban in 2021. The significance of these announcements is clear; as firms grapple with the volume of complaints and implications of FOS decisions, the regulator has stepped in to pause the timeframe for firms to respond to relevant complaints for 9 months whilst it uses its powers to review the arrangements at a number of regulated firms. One step for firms to consider taking is to review their complaints handling arrangements and consider what implications this may have for their own process and likely outcomes, particularly given that the FCA’s intervention may prompt a further wave of complaints.”