FCA consults on further pause for handing motor finance discretionary commission arrangements

🚨 Earlier today, on 30 July 2024, the FCA published a consultation paper entitled ‘CP24/15 – Extending the temporary changes to handling rules for motor finance complaints’ and a press releaseproposing to extend the current pause to the time that firms have to respond to motor finance complaints about discretionary commission arrangements.

📆 The FCA says it proposes to set out its next steps in May 2025 (and not September 2024).  By then, the FCA says it’ll have analysed: (a) the data it has collected from motor finance firms and (b) the outcome of Barclays’ judicial review of the Financial Ombudsman’s decision to uphold a DCA complaint.

✋ The proposed pause to 4 December 2025 will allow the FCA to (for example) consult on a redress scheme or ask firms to deal with motor finance complaints relating to discretionary commission models.  Firms will not be required to respond to such complaints before 4 December 2025.

📝 The FCA also proposes to give consumers until the later of 29 July 2026, or 16 months from the date of their final response letter, to refer any complaint to the Financial Ombudsman Service.

👨‍💻 The deadline for responding to the consultation is 28 August 2024.

King’s Speech makes no mention of consumer credit reform

Earlier today, on 17 July 2024, King Charles III delivered his King’s Speech setting out the areas of reform for the new Labour Government.

But any consumer credit firms or advisers looking for some mention of reform of the Consumer Credit Act 1974 will be disappointed. There was no mention of such reform either in the King’s Speech, or in the background briefing notes.

It therefore remains to be seen whether there will be any further consultation issued by HM Treasury. The Government’s website simply says that the “consultation has concluded“. No further updates have been added since 11 July 2023. But there is surely a long overdue need for reform: the current system is notoriously complex and often works in a way which does not promote innovation.