“PPI on wheels” - watching brief

DCAs and the FCA review

For an introduction to the FCA’s review of Discretionary Commission Arrangements (DCAs) please see our article “PPI on wheels” – an update on the FCA review of discretionary commission arrangements in the motor finance industry.

What’s happening now?

The FCA has paused the complaints handling rules, in order to conduct a review of DCAs. That pause has now been extended again, from May 2025 to December 2025 (although the FCA has said it will end the extension before December if it can).

The FCA’s review focuses on DCAs that were entered prior to the implementation of their ban in January 2021 and in particular, whether customers were overcharged in the period before DCAs were banned in January 2021, and the FCA is also considering a potential redress scheme for affected customers.

There have already been millions of complaints relating to DCAs, with Martin Lewis’ MoneySavingExpert website claiming that there have already been 2.5 million complaints through its tool alone.

Following the Court of Appeal’s decision in Johnson, Wrench, and Hopcraft, there has also been industry-wide discussion about the possibility that the door will be opened for all car finance commission and other forms of lending, not just DCAs. This is expected to further embolden customers to make complaints to firms. An update from the FCA on motor finance (both DCA and non-DCA) commission complaints is also expected in May 2025. More information on this can be found in our article on Brokers' duties and secret commissions.

The FCA has advised that ‘[f]irms who provide motor finance are likely to receive a high volume of complaints following the Court of Appeal judgment.‘ The Chancellor has also commented on the potential seismic effect of the Supreme Court judgment on the industry.

What next?

The status of these matters is very much “watch this space” until at least May 2025. No doubt prudent firms will be doing so, and in the meantime, they should be considering how best to prepare – see our recent article “PPI on wheels” – an update on the FCA review of discretionary commission arrangements in the motor finance industry.

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