As the FCA continues its review of historic motor finance discretionary commission arrangements (DCAs), the FCA released a statement on Friday 12 April that they are writing to firms to remind them that they must maintain adequate financial resources at all times. The letter from the FCA which outlines this can be found at the following link.
The FCA also outlined that firms should also:
- Continue to investigate the complaints they receive involving a DCA. This will help ensure firms are able to act promptly to resolve complaints if the FCA decide the pause should be lifted and complaint handling should resume. Even if the FCA decide that DCA complaints should be resolved through an alternative approach, it is highly likely that firms will need to take similar steps.
- Consider the Information Commissioner's Office guidance on responding appropriately to data subject access requests. Firms should confirm, if a consumer asks, whether their agreement involved a DCA, even if they haven’t submitted a data subject access request.
- Notify the FCA if they are involved in litigation relating to motor finance commissions that are subject to, or likely to be subject to appeal to the High Court or Court of Appeal.
In the statement, the FCA also provided a progress update of the review including:
- Many firms have struggled to promptly provide the data the FCA need. Reasons included data being stored on multiple systems and/or being spread between lenders and brokers. In some older cases, firms have not retained all relevant records.
- The FCA will set out next steps by 24 September 2024 at the latest and if necessary, will extend their review and the complaint pause currently in place.
We encourage our members to reach out to NFDA with any questions or concerns.
FCA publishes Policy Statement and Final Rules - Strengthening protections for borrowers in financial difficulty: Consumer credit and mortgages (PS24/2)
On Wednesday 10 April, the FCA published a Policy Statement to confirm their final rules to strengthen protections for borrowers in financial difficulty. These will primarily affect:
- consumer credit lenders.
- premium finance firms.
- mortgage lenders and administrators.
- home purchase providers and administrators.
- firms who carry out activities in relation to consumer hiring, operating an electronic system in relation to lending (in relation to a borrower under a P2P agreement) or debt collecting.
- consumer credit and mortgage lenders in supervised run-off under the financial services contracts regime.
- Gibraltar-based consumer credit and mortgage lenders passporting into the UK.
These rules will come into force on 4 November 2024 and will replace the Tailored Support Guidance for Consumer Credit, Mortgages and Overdrafts, introduced during the pandemic.
For more information, please refer to the link.
The announcement follows new research from the FCA which found that while many are struggling to meet financial commitments, the picture has improved over the last year – which can be accessed at the link.
