FCA gives finance firms more time to respond to commission complaints

The Financial Conduct Authority is extending the current pause to the time firms must respond to consumers about motor finance complaints involving a discretionary commission arrangement (DCA).

The regulator announced the move on the London Stock Exchange, saying it now intends to set out next steps in its review into the past use of DCAs in May 2025.

By then, it expects to have analysed the data it has 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 pausing complaint handling until 4 December 2025, as it may take until then to confirm how firms would implement it.

“Or it could involve asking firms to start dealing with complaints again as usual, in which case we would consult on ending the pause earlier. If we can set out our proposed next steps sooner, we will.

The FCA announced a review of motor finance in January and into whether motor finance customers have been overcharged because of the past use of DCAs.

It paused the 8-week deadline for motor finance firms to provide a final response to relevant customer complaints to prevent disorderly, inconsistent and inefficient outcomes for consumers and knock-on effects on firms and the market while it assessed the issue and determined the best way forward.

The FCA is assessing thousands of records spanning 14 years. The assessment has been hampered by firms not keeping older data, keeping data on multiple systems or being spread between lenders and brokers.

It now has the data but needs longer to do the number crunching and cannot meet its September deadline.

The situation is also complicated by Barclays Partner Finance starting judicial review proceedings of the Financial Ombudsman Service’s decision to uphold a complaint relating to its use of a DCA.

A hearing is expected to take place in the autumn, where the court will consider whether to grant permission and hear the claim.

“The judicial review will consider legal issues highly relevant to our review. We are also expecting judgments soon in other cases heard by the Court of Appeal that may be relevant in determining our next steps.,” it said.

Under our proposals, firms will not have to issue a final response to DCA complaints until after 4 December 2025 at the earliest.