As part of its review, the Financial Conduct Authority (FCA) announced that firms no longer need to investigate a complaint about discretionary commission agreements (DCAs) within the normal eight-week time limit.
To allow firms more time to gather data, some stretching back almost 14 years, the regulator has pushed back the time so companies do not need to adhere to the standard time frames.
Originally, this was moved to the end of September, but it has been extended to the end of December 2025.
While this might seem inconvenient if you have a complaint waiting with the lender, the FCA has intimated that a specific consumer redress scheme could be introduced in the meantime.
This might be in May 2025, when the FCA will decide on whether firms systemically mis-sold car finance due to DCAs. This follows its probe in January this year into the motor finance market’s secret commission arrangements.
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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.
If you do have a complaint, the chances are it will be upheld in your favour too, according to the FCA’s Sheldon Mills.
The circumstances where you can investigate are if:
- You used car finance to buy a motor vehicle, for example a car, van, campervan or motorbike, before 28 January 2021 (this includes hire purchase agreements, such as PCPs)
- Your lender and broker used a DCA
Mills told Money Saving Expert founder Martin Lewis: “It is too early to say whether any redress intervention will be necessary, but based on our work so far, it is more likely than when we started our review.”
Following the FCA’s announcement, Lewis urged people who could have claims to log their complaints as soon as possible.
The decision to push back the date lenders need to investigate complaints quicker could mean the motor finance mis-selling will not play out like PPI did, where complaints dragged on for many years.
‘Possibility of redress more likely’
Darren Richards, head of insurance, regulatory and risk division at Broadstone, said: “The extension of the FCA’s motor finance probe demonstrates the complexity involved in this issue, especially for firms to gather and provide the correct data while there are also legal ongoing proceedings. It gives the regulator the time and space to review this data, await legal reviews and come to the best conclusion.”
Richards added: “The FCA also suggest that the possibility of redress payments is now more likely as they work through this process. It means that firms should continue their preparations around how they would meet the costs of resolving consumer complaints and the potential total liability.
“These costs are likely to be significant, while the redress scheme itself could prove costly and time-consuming. All in all, this latest update from the FCA seems to confirm that this probe looks set to rumble on as public and regulatory scrutiny grows.”
