CP24/15: Extending the temporary changes to handling rules for motor finance complaints

Read CP24/15 (PDF)

Why we are consulting  

We need to extend our temporary complaint handling rules for discretionary commission arrangement (DCA) complaints in the motor finance industry. This is because it has taken longer to collect and review the data than we planned. There is also relevant ongoing litigation.

This means that we will not be able to set out next steps in our review into the past use of DCAs by 24 September, as we originally planned.

We now intend to set out next steps in May 2025. By then, we expect to have analysed the data we have collected from firms and assessed the outcome of the Barclays judicial review of the Financial Ombudsman’s decision to uphold a DCA complaint.

Our next steps could involve consulting on a redress scheme. This is why we intend to take the precautionary step of extending the complaint handling pause until 4 December 2025, as it may take until then to confirm how firms would implement it.

We are also proposing to give complainants who are sent a final response to a DCA complaint until at least 29 July 2026 to decide whether to refer their complaint to the Financial Ombudsman.

We recognise that continuing to pause complaint handling, while necessary, means that many consumers who have complained to firms about DCAs have now been waiting a long time.

We wanted to consult with you on this change.

Who this is for 

This consultation paper is relevant to: 

• consumers who have taken out motor finance agreements involving DCAs  
• motor finance providers  
• motor finance credit brokers, including motor dealers  
• professional representatives bringing complaints to motor finance providers and credit brokers about DCAs, including claims management companies (CMCs) regulated by the FCA

Next steps  

Please consider our questions in Annex 1 of this paper. 

Please send us your comments by 28 August 2024. You can:

• use the online response form  
• write to us at Redress Policy Team , FCA, 12 Endeavour Square, London E20 1JN
• email us at [email protected]

We will consider your comments and publish our feedback, and our final rules, in a policy statement by 24 September 2024.

Background

In January 2024, we set out and explained our response to a potential increase in complaints in the motor finance market.

We are assessing whether the historic use of DCAs means a significant number of individuals could be due redress (compensation) from motor finance firms because they paid too much for their car loans.

If we find there has been widespread misconduct and that consumers have lost out, we will identify how best to make sure people that are owed compensation receive it in an orderly, consistent and efficient way.

For the reasons given in Chapter 1 of this consultation paper, we will not have completed our diagnostic work by 24 September, as we set out to do in January. Therefore, we need to extend our temporary complaint handling rules for DCA complaints.