3 weeks ago
The Financial Conduct Authority (FCA) has again extended the current pause in the time motor finance firms have to respond to customer complaints, this time in light of the recent Court of Appeal finance judgement.
Making the announcement this morning (Nov 13), the FCA said the Court of Appeal’s judgement on October 25 has caused the decision to extend.
The proposal is expected to be published within two weeks, and if agreed will mean the pause will be in place until mid-December 2024.
The FCA has been investigating the motor finance industry’s use of now banned discretionary commission arrangements (DCAs) since January.
The long-running pause has been put in place while the FCA decides to implement a formal redress scheme.
The FCA said that October 25’s ruling will now likely see motor finance firms receive ‘a high volume of complaints’, adding: ‘Any complaint extension would allow them time to consider how these might be efficiently and effectively handled.
‘This would help prevent disorderly, inconsistent and inefficient outcomes for consumers making complaints, motor finance firms and the market.’
The Finance and Leasing Association (FLA) called the decision ‘sensible’.
FLA director general Stephen Haddrill said: ‘This is a sensible move, and one we had been discussing with the FCA since the Appeal Court judgment.
‘However, it is just the first step – restoring legal and regulatory certainty to this market will require an expedited path to the Supreme Court, and a stay on claims in the lower courts pending the Supreme Court’s judgment.’
The Finance Commission Story So Far
- FCA needs to answer serious questions over car finance Court of Appeal decision
- Car finance slowly starting up again as lenders change systems and some freeze commission payments
- Chaos: Car finance grinds to a halt in wake of Court of Appeal decision
- Close Brothers stops underwriting new dealer finance after court ruling
- FCA chief executive calls for clarity over motor finance judgement
- Car finance pauses as banks figure out legal implications – who has stopped lending?
- Honda ‘pulls car finance and delays customer handovers’
- FLA: Court of Appeal ruling was ‘very unexpected’ but ‘welcome’
- Could car finance commissions case become the next PPI ‘scandal’?
- Short-term headache or genuine game-changer? What mounting finance crisis means for dealers
- Banks face downgraded credit ratings as a result of car finance scandal
The October 25 ruling saw motor finance firms pausing business immediately while they rushed to change agreements in light of the judgement.
The Court of Appeal ruled that commissions car dealers received from brokers should be declared in full to customers, and that customers had time to consider the pay-outs.
Business has started to return to normal with firms such as Close Brothers – one of the companies involved in the Court of Appeal case on October 25 – confirming on November 7 that it had begun a ‘phased return to the writing of new UK motor finance business’.
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The post Court of Appeal judgement leads FCA to AGAIN extend current pause in DCAs appeared first on Car Dealer Magazine.
