FCA statement regarding motor finance firms’ financial resources

We are writing to motor finance firms to remind them they must maintain adequate financial resources at all times.

We are currently reviewing the historical use of motor finance discretionary commission arrangements (DCA). We have observed firms taking different approaches to account for the potential impact of previous use of DCA on their financial resources. So, we are writing to firms to remind them they must maintain adequate financial resources at all times. 

While each firm will need to examine its own specific circumstances, we expect this would include planning for any additional operational costs from increased complaints and, where applicable, to meet the costs of resolving those complaints.

As our review continues, firms should also: 

• Continue to investigate the complaints they receive involving a DCA.  This will help ensure firms are able to act promptly to resolve complaints if we decide the pause should be lifted and complaint handling should resume. Even if we decide that DCA complaints should be resolved through an alternative approach, it is highly likely that firms will need to take similar steps.

• Consider the Information Commissioner’s Office guidance on responding appropriately to data subject access requests. Firms should confirm, if a consumer asks, whether their agreement involved a DCA, even if they haven’t submitted a data subject access request. 

• Notify us if they are involved in litigation relating to motor finance commissions that are subject to, or likely to be subject to appeal to the High Court or Court of Appeal.

FCA statement regarding motor finance firms’ financial resources | FCA