Menu
Save, make, understand money

Credit Cards & Loans

Drivers face further wait as regulator extends motor finance complaint deadline

Drivers face further wait as regulator extends motor finance complaint deadline
Emma Lunn
Written By:
Posted:
24/09/2024
Updated:
25/09/2024

The Financial Conduct Authority (FCA) is giving finance firms and dealers more time to deal with complaints about motor finance commission.

The regulator has extended the pause of the deadline for motor finance firms to provide a final response to customer complaints regarding discretionary commission arrangements (DCAs) until 4 December 2025.

In January 2021, the FCA banned car finance lenders from making DCAs with brokers for hire purchase (HP) or personal contract purchase (PCP) deals.

Since 6 February, two million drivers have complained to car finance lenders using a free car finance reclaim tool from Money Saving Expert, and those who haven’t have been urged to do so.

On 11 January 2024, the FCA announced a review into whether motor finance customers have been overcharged because of the past use of DCAs.

It also paused the eight-week deadline for a final response to relevant customer complaints. It introduced the pause to “prevent disorderly, inconsistent and inefficient outcomes for consumers”, as well as knock-on effects on firms and the market, while it assessed the issue and determined the best way forward.

Sponsored

Wellness and wellbeing holidays: Travel insurance is essential for your peace of mind

Out of the pandemic lockdowns, there’s a greater emphasis on wellbeing and wellness, with

Sponsored by Post Office

On 30 July 2024, the FCA consulted on a proposal to extend the DCA complaint-handling pause. This was because it had taken the regulator longer than expected to get the data it needed from firms.

Barclays Partner Finance had also launched a judicial review of the Financial Ombudsman Service’s (FOS’) decision to uphold a complaint relating to its use of a DCA. The judicial review will consider legal issues highly relevant to the FCA’s work. The hearing will take place in October.

The FCA said it will set out the next steps in its review into the past use of DCAs in May 2025. By then, it expects to have completed its analysis and assessed the outcome of the Barclays judicial review and other relevant cases in the Court of Appeal.

The FCA said the extended pause allows it time, if necessary, to introduce an alternative way of dealing with DCA complaints, such as a consumer redress scheme.

While firms have longer to deal with DCA complaints, consumers can still complain to providers and there are time limits for doing so.

The FCA also confirmed 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 six months). This is so consumers will not have to decide whether to refer their complaint to the Financial Ombudsman before the FCA announces its next steps.