FCA confirms car finance complaints handling pause to December 2025

The FCA has today announced that it has extended the pause to the deadline for motor finance firms to provide a final response to customer complaints regarding discretionary commission arrangements (DCAs) which could impact car finance providers until December 2025.

In January 2024, the FCA announced a review into whether motor finance customers have been overcharged because of the past use of DCAs. Usually firms had an eight week limit within which to give their final response to motor finance customers complaints.

Earlier this year the FCA stepped in to review the issue after the Financial Ombudsman Service deemed firms could be liable for historic cases, the FCA introduced the pause, and nhas ow extended it, to “prevent disorderly, inconsistent and inefficient outcomes for consumers, as well as knock-on effects on firms and the market” while it continues to assess the issue.

The FCA’s review was initially hoped to be completed this year however that has proved impossible due to delays in getting data. plus an ongoing judicial review of a FOS decision against Barclays Partner Finance, which is due to be heard in October.

The finance regulator now hopes to set our the next steps of its review in May 2025, which is likely to be specific steps to deal with DCA complaints and might even include the launch of a consumer redress scheme.

Consumers have until the 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.

Commenting on the announcement Darren Richards, Head of Broadstone’s Insurance, Regulatory & Risk division, said “The extension of the pause for handling complaints in the FCA’s motor finance probe highlights again 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 on behalf of consumers.

“With the FCA previously suggesting that the possibility of redress payments is now more likely it means that firms should continue their preparations around how they would meet the costs of resolving consumer complaints and the potential total liability. The further pause is likely to increase the number of complaints to be handled and potentially the interest due on any redress. On the flip side, it will defer any compensation for customers and also increase the risk of customers being timed out of the process.”