Article by Harry Owen
On 24 September 2024 the Financial Conduct Authority announced a revised timetable for announcing its much anticipated findings following the investigation into discretionary commission arrangements (DCAs) in respect of car finance loans.
The FCA are now planning to announce the findings of their investigation and next steps in May 2025, stating that this will allow the time needed to assess whether firms should be allowed to handle complaints in the usual way or whether to introduce a different approach.
While investigating, the FCA also extended the deadline that providers (lenders or brokers) must provide a final response to customer car finance complaints to after 4 December 2025.
On 11 January 2024, the FCA announced a review into whether motor finance customers have been overcharged because of the past use of DCAs. At that time the FCA paused the 8-week deadline for a final response to complaints, in an effort to avoid disorderly, inconsistent and inefficient outcomes for consumers, as well as knock-on effects on firms and the market, while the issue was investigated and a way forward determined.
On 30 July 2024, the FCA consulted on a proposal to extend the DCA complaint handling pause, due to delays in obtaining the relevant data required.
The FCA is also awaiting the outcome of a judicial review launched by Barclays Partner Finance, which will consider the Financial Ombudsman Service’s decision to uphold a complaint relating to its use of a DCA. It is considered that the judicial review will consider legal issues highly relevant to the FCAs investigation. The hearing is due to take place in October 2024.
It is now anticipated that the FCA will set out the next steps in their review into the past use of DCAs in May 2025. By then, the FCA expect to have completed their analysis and assessed the outcome of the Barclays Partner Finance judicial review and other relevant cases in the Court of Appeal.
The indication from the FCA is that the once the extended pause finally comes to an end, it looks increasingly likely that a consumer redress scheme will be introduced as an alternative way of dealing with DCA complaints.
It has been confirmed by the FCA that consumers have until the later of 29 July 2026 or 15 months from the date of their final response letter from the firm, to refer a DCA complaint to the Financial Ombudsman (instead of the usual 6 months). This will prevent consumers from having to decide whether to refer their complaint to the Financial Ombudsman before any proposals for alternate resolutions are announced.
It has been reported that in excess of 500,000 motor finance complaints have been raised and as such there has been much anticipation as to how matters will move forward, but it appears for the time being at least, that the wait will continue.
