Pause for Firms to Respond to Motor Finance Complaints Extended to 4 Dec 2025, FCA Confirms

The pause for motor finance companies to send their final response to customer complaints related to discretionary commission arrangements (DCAs) has been officially extended to 4 December 2025, the Financial Conduct Authority confirmed in a statement on Tuesday (24 September 2024). The decision followed a consultation that commenced on 30 July 2024 on the proposed extension of the pause.

The FCA has also officially extended the time for consumers to bring their DCA complaint to the Financial Ombudsman Service. Under the current timeline, they have until the later of these dates to do so:

• 29 July 2026; or
• 15 months after they received their lender’s final response on their complaint.

The FCA also reminds consumers that they can still lodge their complaints to their motor finance providers even when the firms have a longer time to deal with the complaints.

The FCA also made clarifications and changes to the timeline for companies to retain records on DCA-related complaints.

The temporary hold and other changes to the timeline in the claims handling process are outlined in the FCA’s Policy Statement 24-11 (PS24/11).

New Timeline for Retaining Records

Current rules require motor finance companies to maintain records of customer complaints, including the procedures taken to resolve them, and to retain these records for three years from the date the complaint is received.

The FCA now clarifies that the period from 11 January 2024 to 4 December 2025 will not be included in counting the three-year period required for the companies to retain the records on DCA-related complaints.

The FCA has also confirmed extending the three-year rule by 15 months to ensure the pause is adequately reflected. The companies must now keep relevant records until 11 April 2026 to cover the pause and any potential new actions.

Timeline for Consumers to Refer Their Complaints to FOS

The FCA has provided sample scenarios in its PS24/11 to guide customers regarding the time they have to refer their DCA car finance claims or complaints to the Financial Ombudsman.

• Customers who were sent or will be sent a final response by their motor finance company to their DCA complaint from 12 July 2023 to 29 April 2025 will have up to (and including) 29 July 2026 to bring their complaint to the FOS;
• Those who will be sent a final response from 30 April 2025 to 29 January 2026 will have within 15 months of the date the company sends the final response; and
• Those who will be sent a final response from 30 January 2026 and onwards will have within six months of the date the company sends the final response.

Industry Reactions

The FCA’s latest announcement provides clarity for businesses in the motor finance sector, Chief Executive Sue Robinson of the National Franchised Dealers Association (NFDA) noted, further stating that the association is “fully committed” to providing support to its members “throughout this period of uncertainty.”

Robinson further assured that NFDA will “maintain ongoing communication” with the FCA to make sure its members remain fully informed of the situation.

The NFDA Chief also encouraged all dealers to stay transparent with customers regarding the extended pause and to take note of the new timelines.

Now that redress payments are more probable, companies should continue to get ready for the financial impact of resolving complaints, according to Darren Richards, Insurance, Regulatory & Risk Division Head at consultancy Broadstone. He further noted that the extension is “likely to” increase the number of complaints companies have to deal with and “potentially the interest due on any redress.”

Background

On 11 January 2024, the financial watchdog declared that it will look into the historical implementation of the DCAs in the motor finance sector to determine if consumers were harmed due to excessive interest rate payments.

At the same time, the authority implemented a temporary hold, originally set until 25 September 2024, to the eight-week deadline for motor finance companies to make a final response to DCA-related complaints. This measure aims to avoid inconsistent and disorderly outcomes for affected customers and avoid potential market disruptions while the issue is being assessed and a clear path forward is determined.

On 30 July 2024, the FCA sought consultation on its proposal to extend the pause on DCA complaint handling to December for the following reasons:

• Delay in gathering the data needed from motor finance companies; and
• Awaiting progress in Barclays Partner Finance’s request for judicial review, expected to be heard in October, on the decision of the Financial Ombudsman Service to uphold a prior DCA-related case, wherein the legal issues are deemed “highly relevant” to the FCA’s work.

FCA’s Next Steps

The FCA plans to finish its review of the past use of DCAs by May 2025 and will outline its next steps in the investigation at that time. It will also take into consideration the outcome of Barclays judicial review as well as other relevant cases pending in the Court of Appeal.

The extended pause will provide enough time for the agency to consider a redress scheme or other alternative ways of dealing with the DCA-related complaints, if required, according to the FCA.

The FCA discloses that a consumer redress scheme is “more likely” to happen compared to when it started the investigation on the motor finance sector. However, the agency said that it is “too early to say” whether they will intervene in this way. 

Results of Open Consultation

In July 2024, the FCA published Consultation Paper 24-15 (CP24/15) and sought feedback on the extension of the pause for motor finance companies to make their final response to customer complaints related to DCA matters. The Authority also sought changes to some of the timelines in the claims handling and record keeping processes.

The paper was available for comments and suggestions from interested parties from 30 July to 28 August 2024.

Motor finance companies, law firms, trade associations, and individual stakeholders responded to the call for consultation, including the following non-confidential ones:

• Bott & Co
• Close Brothers
• MotoNovo Finance
• British Vehicle Rental and Leasing Association
• Claims Management Association 
• The Association of Consumer Support Organisations
• Consumer Credit Trade Association
• Money Saving Expert
• Christian Dale
• Christopher Parker

Although the FCA’s proposals were broadly welcomed by 16 respondents, concerns were raised regarding the possible additional cost and resourcing challenges that could arise from the proposed changes.

Furthermore, there were oppositions to the extended pause on the basis that it will take longer for consumers to wait in the event the FCA investigation concludes that they are owed compensation.

Other respondents call for greater transparency on the FCA’s part regarding their progress on the DCA work.

In the end, the FCA are proceeding with all of the proposals being consulted on.