The Financial Conduct Authority (FCA) has announced a further extension to the deadline for motor finance firms to provide final responses to customer complaints related to discretionary commission arrangements (DCAs), pushing the deadline to 4 December 2025. This extension is part of the FCA’s ongoing investigation into whether motor finance customers have been overcharged due to historical DCA practices.
The investigation, launched on 11 January 2024, initially included a pause on the eight-week deadline for handling relevant complaints. This pause was introduced to ensure that outcomes for consumers, firms, and the wider market were orderly, consistent, and efficient. The regulator’s review has faced delays, with the FCA citing difficulties in obtaining necessary data from motor finance firms.
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In a consultation on 30 July 2024, the FCA proposed extending the complaint-handling pause due to the time required for firms to provide key data. Barclays Partner Finance has also initiated a judicial review of a Financial Ombudsman Service decision related to its use of DCAs. This legal review, set for October, addresses significant legal issues that could impact the FCA’s review process.
Commenting on the extension, Darren Richards, Head of Broadstone’s Insurance, Regulatory & Risk division, highlighted the challenges motor finance firms face in gathering and submitting data during ongoing legal proceedings.
“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 ongoing legal proceedings,” he said.
Richards also noted that the FCA’s suggestion that redress payments are now more likely means firms should continue to prepare for the financial impact of resolving complaints. “The further pause is likely to increase the number of complaints to be handled and potentially the interest due on any redress,” Richards added, while also warning that the delay could defer compensation for customers and increase the risk of complaints being time-barred.
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By GlobalDataSue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA), commented that the FCA’s decision provides much-needed clarity to the motor finance sector. “The FCA’s decision to extend the complaint-handling pause until December 2025 follows insights gathered from members and submitted in our NFDA consultation response. This decision provides further clarity for businesses in the motor finance sector as the review continues,” said Robinson. She urged dealers to take note of the new timelines and maintain transparency with consumers. Robinson also assured dealers that the NFDA would continue its dialogue with the FCA to keep members fully informed of any updates.
The FCA has indicated it will provide an update on the review by May 2025, after assessing the outcome of the Barclays judicial review and other related legal cases. The extended pause will give the regulator time to consider alternative solutions, such as a consumer redress scheme. While the FCA has not confirmed that such a scheme will be introduced, it has noted that the likelihood of such an intervention has increased.
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