The motor finance industry is at a crossroads. The FCA has scrapped its May timeline for DCA complaint guidance. Instead, an update will come within six weeks of the upcoming Supreme Court decision – leaving lenders waiting for clarity while cases pile up.
This new uncertainty comes as car loans surpass credit cards as the most complained-about financial product. The Financial Ombudsman Service reported an unprecedented 18,658 complaints in Q4 2024, triple the previous volume. Meanwhile, more than 2.5 million people have submitted letters via the template created by consumer rights expert, Martin Lewis.
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Regulatory uncertainty is threatening lender stability
The FCA’s decision to link its timeline to the Supreme Court’s ruling doesn’t reduce the urgency for preparation; it intensifies it. With no fixed deadline for further DCA updates, the regulator has created a fluid situation that demands operational flexibility.
Industry insiders have long warned that waiting for complete regulatory clarity before building a response capability is a dangerous strategy.
When the FCA finally delivers its ruling, every affected lender will scramble for the same legal expertise, technical support and operational resources – creating an enormous strain on capacity.
Lenders will have a narrow window to build resilient systems before complaint volumes reach critical mass. They must establish streamlined processes to acknowledge complaints, create consistent responses to affected customers, and communicate case outcomes to potentially millions of people.
This response won’t happen in a vacuum, either. Lenders still need to maintain business-as-usual operations while ramping up capacity to handle DCA complaints. Customer service teams will be balancing everyday enquiries alongside a flood of commission-related cases, increasing the pressure on people and processes.
Every day without a proper response infrastructure will mean mounting backlogs that require resolution under heightened regulatory scrutiny. The general CRM systems and spreadsheets that might suffice for normal complaint volumes are likely to buckle under the surge.
A full redress could push current systems over the limit
It’s not just the waiting game that leaves lenders vulnerable. The potential scope poses an equal risk.
In its latest statement, the FCA hints at an industry-wide redress scheme to take the burden away from consumers. A full remediation exercise could elevate the DCA complaints response to the same scale as the PPI crisis of the early 2010s.
The regulator also warns that it will consider non-DCA complaints following the Supreme Court’s ruling. This further widens the potential scope of impact across motor finance lending, adding to the already overwhelming volume of cases requiring review and resolution.
Companies attempting to build remediation workflows from scratch after the FCA’s announcement will face not only development delays, but also implementation challenges amid surging complaint volumes. The current uncertainty increases the need for purpose-built complaints management systems that can adapt to various regulatory outcomes.
Prepare now, or pay the price later
Many motor finance lenders may choose to ‘kick the can down the road’ while we wait for the FCA’s next update. But this will expose them to greater financial, reputational and legal risk when new guidance arrives.
As we count down to the Supreme Court’s decision, lenders face a defining choice: use the time to build robust response mechanisms, or wait and be overwhelmed when regulatory clarity arrives. The former approach preserves operational stability and protects shareholder value. The latter threatens both.
Forward-thinking lenders are already assessing their exposure by analysing past DCA and non-DCA commission arrangements. They’re ensuring these records are easily accessible by customer service teams. They are deploying scalable complaint handling processes and creating quality assurance frameworks for consistent decisions. And they are stress-testing these systems to make sure they can handle a full-scale remediation exercise.
DCA preparation can’t wait for FCA clarity. Lenders must act now, or pay the price later.
Jack Nicholls is Motor Finance Sector Lead at Aptean Respond, a specialist complaint management and remediation software provider.
