Posted: 12th January 2024
Motor Finance Commission Complaints
Yesterday (11th January 2024), the FCA announced an immediate pause on firms responding to motor finance commission complaints. The intention is that firms will pause their handling of discretionary commission related complaints received between 17 November 2023 and 25 September 2024. The pause is for a period of 37 weeks to enable the FCA to review historic commission arrangements.
This action from the FCA has been prompted by the recent release of two Financial Ombudsman Service decisions, which have been upheld in favour of the customer, against a backdrop of mixed outcomes across a number of court cases.
The use of a vehicle is often a necessity for the everyday lives of people across the country, and the motor finance industry plays a critical role in facilitating this through ownership or a lease. It is important the FCA and motor finance firms take the time given during this pause to ensure that the industry can continue to deliver value for customers for many years to come.
What are the key messages from the PS 24/1?
- The pause that is being introduced stops the clock on all current complaints until 25 September 2024. This means that if you have currently got a complaint that is two weeks old, firms will still have a further six weeks to resolve it after 25 September 2024. Any complaint received during the pause period will have the normal eight week period for resolution after 25 September 2024
- Consumers will also have 15 months instead of six months to refer their complaint to the Financial Ombudsman Service. This applies to all consumers who have / will receive a final response since 12 July 2023 up to 20 November 2024
- During this pause period the FCA will be using its powers under s166 Financial Services and Markets Act 2000 to review historic sales and determine if action needs to be taken to proactively redress customers
What should firms be thinking about?
- Initially, firms should be thinking about how to handle their current paused population of complaints. For example: which cases are solely about discretionary commission arrangements and can be paused and which are about multiple issues that need to be split so the other complaints issues can be resolved
- Whilst many firms started this exercise some time ago, it is worth reviewing the nature of your discretionary commission sales arrangements across the time period against the recent Financial Ombudsman decisions. This will help give you a view on gaps in current practice and help you estimate and size any potential redress population
- In the current Consumer Duty focused environment it is also important to consider whether you have the right outcome testing and MI in place to demonstrate that your current sales processes are delivering good customer outcomes.
- Consider your resource plan and how you will flex resources short term to support additional DSARs, customer contact on current complaints and logging of new complaints. It is important to consider how to engage customers with current complaints to minimise follow-up calls
- If you are in a position where some pockets of customers may require redress, work with remediation specialists to learn from previous customer redress programmes. It is important to ensure that remediations are done right first time, and that they are done efficiently with the use of the right processes, people and technology to ensure that customers get good outcomes without disproportionate operational costs