DCA Complaints: The FCA’s Extended Timeline and Ongoing Delays

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In short, five years after the original banning of discretionary commission arrangements, the FCA will provide a new approach as to how firms should deal with these matters!

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As you are aware, the Financial Conduct Authority (FCA) banned discretionary commission arrangements (DCA) in January 2021 in the motor finance sector. In January 2024, the FCA made rules to pause the usual eight-week deadline for motor finance firms to respond to DCA complaints.

The FCA stated when it made these rules, it would set out the next steps by 24 September 2024. However, in July 2024, it issued the Consultation Paper CP24/15 Extending the temporary changes to handling rules for motor finance complaints. The headline dates from this consultation paper show that the FCA will set out its next steps in the review in May 2025. In December 2025, the FCA will confirm final rules for how consumers will be compensated. From 2026, firms will need to follow the FCA’s new approach.

In short, five years after the original banning of discretionary commission arrangements, the FCA will provide a new approach as to how firms should deal with these matters! Experience tells us the FCA is not known for its quick turnaround times to resolve issues. Of course, the FCA has an obligation to be thorough in the work it does, however, five years does seem to be an extremely long time to decide this matter.

In mitigation, the FCA has provided some details as to why it has delayed the outcome of this review. The most significant is the conclusion of relevant litigation that includes Clydesdale Financial Services Limited’s, trading as Barclays Partner Finance, judicial review of the Financial Ombudsman Service’s decision to uphold a complaint relating to its use of DCA. The case involves important questions of law about the proper interpretation of the FCA’s rules and the Consumer Credit Act 1974. The FCA has stated, “We anticipate the court’s decision on the issues raised in the judicial review is likely to be highly relevant in informing the FCA’s next steps.”

Rest assured, Lawgistics will be keeping a close eye on the proceedings and will provide you with the necessary updates on the matter. If you have any questions or comments regarding this update, please do not hesitate to contact us.

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