FCA confirms DCA deadline extension

The Financial Conduct Authority (FCA) has confirmed that 4 December 2025 is now the deadline for motor finance firms to provide a final response to customer complaints regarding discretionary commission arrangements (DCAs), rather than its original date of 25 September 2024. It has also indicated that a consumer redress scheme is on the cards.

The regulator said “ the extended pause allows us time, if necessary, to introduce an alternative way of dealing with DCA complaints, such as a consumer redress scheme. It is too early to say if we will intervene in this way, but based on our work so far, it is more likely than when we started our review.”

When the FCA first announced its motor finance DCA review in January, it paused the 8-week deadline for a final response to relevant customer complaints to prevent disorderly, inconsistent and inefficient outcomes for consumers, as well as knock-on effects on firms and the market.

That original pause period has been extended because of delays in obtaining the necessary data from firms. The regulator said it also wanted to assess the outcome of the judicial review proceeding started by Barclays Partner Finance in relation to the Financial Ombudsman’s decision to uphold a DCA complaint, which will consider legal issues highly relevant to the FCA review.

This hearing is scheduled to take place on 15-17 October 2024. This will be a “rolled-up hearing”, where the court will consider whether to grant permission and, if so, then hear the claim.

The FCA says it will set out next steps in its review into the past use of DCAs in May 2025, by which point it expects to have completed its analysis and assessed the outcome of the Barclays judicial review and other relevant cases in the Court of Appeal.

Consumers have until the later of 29 July 2026 or 15 months from the date of their final response letter from the firm, to refer a DCA complaint to the Financial Ombudsman (instead of the usual six months). This is so consumers will not have to decide whether to refer their complaint to the Financial Ombudsman before the FCA announces next steps.

“The FCA have firmed up the schedule for their review, but what is really needed is to remove the uncertainty over the outcome. AFC research has found lenders who think the delay is bad news outweigh those who welcome the decision by a factor of two. Small wonder.

“Delaying the decision leaves firms bracing themselves for increased complaints and potential redress schemes. The need for continued contingency -when there may be no case to answer – is discouraging investment, slowing Government efforts to kick-start the economy, and reducing the capacity for the industry to play its vital role in enabling the transition from ICE to battery. There is a clear opportunity for the new Government to intervene here to make the FOS/FCA double act work properly for the good of consumers and industry,” he added.

“The next AFC conference in November will focus on the likely impact of the new Government on the auto, equipment and asset finance industries and we will be exploring this issue in more depth then.”

The latest developments in the FCA’s motor finance review were discussed in a recent AFC webcast, sponsored by Bynx. Read the webcast summary, with analysis from David Betteley, here.