FCA confirms DCA complaints handling pause to December 2025

Car loan providers and dealerships won't need to give a final response to customer complaints related to discretionary commission arrangements (DCAs) for more than a year while the regulator continues to tackle the issue.

The Financial Conduct Authority (FCA) has just confirmed it has extended the pause to firms' deadline until December 4 in 2025.

Usually firms had an eight week limit within which to give their final response to motor finance customers complaints.

But since the subject of DCAs blew up earlier this year, and the FCA stepped in to review the issue after the Financial Ombudsman Service deemed firms could be liable for historic cases, the FCA introduced the pause, and now extended it, to "prevent disorderly, inconsistent and inefficient outcomes for consumers, as well as knock-on effects on firms and the market" while it continues to assess the issue.

The FCA's review was initially hoped to be completed this year however that has proved impossible due to delays in getting data. plus an ongoing judicial review of a FOS decision against Barclays Partner Finance, which is due to be heard in October.

The finance regulator now hopes to set our the next steps of its review in May 2025, which is likely to be specific steps to deal with DCA complaints and might even include the launch of a consumer redress scheme. 

Consumers have until the later of July 29, 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 6 months.

In July, FCA chief executive Nikhil Rathi said there certainly have been issues with the way some motor retailers have been incentivised by some finance houses.

Rathi said: "This work has been underway now for a number of months and what we have found is that there are issues and there have been issues in this market."

Resolving a mass of complaints could be a challenge for the industry. He said one option is to allow firms to continue to process complaints in the normal way, "and that might be a route we choose for some situations", but now that a picture of the issue is becoming clearer it is looking more likely that some kind of structured redress mechanism may be necessary.

The problem of missold payment protection insurance was resolved by a FCA-implemented compensation system, which led to regulated firms paying out millions of pounds.

He doesn't expect the redress for the motor finance issue to be of the same scale as the PPI scandal.