Member Article

On the 30 July 2024, the FCA released a statement confirming their proposals to extend the current pause to the time firms have to response to consumer about motor finance complaints that involve a discretionary commission arrangement (DCA). 

The FCA has confirmed that it intends to:

1. Set out next steps in May 2025 rather than September 2024; 
2. Extend the pause on complaints handling to 4 December 2025, but this may be lifted earlier if the FCA is able to set out its next steps sooner than anticipated; and 
3. Give customers until the 29 July 2026 (or within 15 months of the date of their final response letter) to refer their complaint to FOS. 

On 11 January 2024, the FCA announced a temporary change to the complaints handling rules for firms, which paused the usual 8-week deadline so that motor finance firms had until the 25 September 2024 to issue their final responses to complaints relating to a DCA. 

The FCA’s new announcement sees an extension being proposed to these rule changes and the FCA has invited responses to its proposals, through a consultation paper (CP24/15). The FCA cites the following considerations as reasons for the new proposals:

1. Delays in the receipt of data (but comments that firms have engaged constructively and that delays are due to data storage and systems); 
2. Judicial review proceedings commenced by Clydesdale Financial Services (trading as Barclays Partner Finance); and 
3. Court of Appeal proceedings in July 2024 (the judgments of which are awaited). 

So, what does this announcement mean for motor finance firms? 

It is likely that this announcement will spark another phase of media attention, which in turn will result in an increase in complaint volumes and increased referrals to the Financial Ombudsman. Customers are likely to become frustrated at the lack of progress with their complaints and the further delays in reaching a resolution. This reinforces the need to ensure that firms communicate clearly and sensitively with customers (particularly in light of the requirements under Consumer Duty). 

Firms should:

1. Consider reinforcing communications with customers, including reaching out to those customers that have already received an acknowledgment to explain what the new proposals could mean for them. Communicating with customers now will help to control referrals to FOS (and will avoid FOS fees). 
2. Review data and existing complaints so they are “ready to go” with the next announcement from the FCA. 
3. Implement the guidance from the FCA to continue to progress DCA complaints so that they remain ready to put the complaints through the approach decided by the FCA.
4. Monitor activity by CMCs and identify trends in complaints (and where appropriate, speak to legal advisors supporting you with your complaints). 
5. Consider the questions in the FCA’s consultation paper and consider responding. 

What’s next?

The FCA will issue a policy statement by the 24 September 2024 to confirm the final dates for this second amendment to complaints handling rules. 

 

Link to article