Finance
Britain’s FCA consults on motor finance complaints extension
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LONDON (Reuters) – The Financial Conduct Authority is seeking feedback on proposals to give lenders more time to handle complaints on non-discretionary
LONDON (Reuters) – The Financial Conduct Authority is seeking feedback on proposals to give lenders more time to handle complaints on non-discretionary motor finance commissions, after a recent legal ruling widened the number of customers they may need to compensate.
The regulator has previously extended the time firmshave to respond to motor finance complaints involving a discretionary commission arrangement (DCA).
The watchdog said on Thursday it would consult on two options for extending the time companies have to provide final responses to motor finance complaints, to give them more time to handle an expected deluge effectively and to prevent disorderly, or inconsistent, outcomes for consumers and firms.
The first option is until May 31 2025. This reflects how long it may take to hear whether the Supreme Court has granted lenders permission to appeal against an October ruling which said was unlawful for car dealers to earn a commission from lenders on motor finance without obtaining customer consent.
The judgment related to fixed commission motor finance agreements as well as DCAs, which the FCA banned in 2021.
A longer extension until December 4 2025 has also been proposed, to align with the current rules for motor finance firms dealing with discretionary commission complaints.
(Reporting By Sinead Cruise; Editing by Amanda Cooper)
Motor finance refers to the financial products and services that help consumers purchase vehicles, often involving loans or leasing agreements specifically designed for automobiles.
A complaint in finance is a formal expression of dissatisfaction by a customer regarding a financial product or service, which can lead to a request for resolution or compensation.
A discretionary commission arrangement is a type of commission structure where the amount paid to a dealer or broker is determined at their discretion, often based on the sale of financial products.
The Financial Conduct Authority (FCA) is a regulatory body in the UK responsible for overseeing financial markets and protecting consumers by ensuring that financial firms operate fairly and transparently.
A legal ruling is a decision made by a court or regulatory authority regarding the interpretation of law, which can set precedents for future cases and affect regulations in financial services.
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