Insights from FCA’s Motor Finance Complaints Changes Webinar

Today (24^th January 2024) the FCA hosted a webinar on the temporary changes to complaint handling rules for motor finance. Tom Jeffery – Advisory Director (Operations & Remediation) at Square 4 provides his key takeaways from the session below:

1. Operational Preparedness: Firms should proactively anticipate increased customer contact. Likely increased contact points include increased information requests, DSAR’s, emails, CMC’s, inbound calls and social media communications. Firms must be resilient, leaving no room for operational disruption. Firms should also be prepared to re-contact customers (or the CMC/Law firm if applicable) who: complained on or after 17^th November 2023 and have not received a Final Response, and those customers who have received a Final Response before 11^th January 2024 to inform them of the FOS time limit extension.
2. Dive deeper into DCA complaints: the regulator has instructed firms to continue progressing complaints to help reach the ultimate resolution. It’s crucial to go beyond just acknowledging complaints and adding them to the complaints pipeline. Take the time to thoroughly investigate each complaint, understanding the nuances and underlying issues and any wider complaint points raised.
3. Pause to Time Limits: The pause allows firms the opportunity to suspend sending Final Responses for any DCA complaint received between 17^th November 2023 and 25^th September 2024 inclusive. The pause, however, does not apply to the investigation and gathering of evidence. Firms are encouraged to continue with their investigation until an appropriate response can be provided, which may be during this period, and where multiple and unrelated DCA issues are reported, separate the complaint into different parts. In such cases, usual DISP requirements will apply to any Final Response sent during this time, including the requirement to take relevant FOS decisions into account. The pause, however, does not prevent firms from looking at proactive remedies. In line with Principle 11, firms must notify the FCA of any proposed proactive redress or remediation exercises.
4. Adequate Financial Resources: The FCA confirmed that it was “too early” to announce their final approach and in response to a question from the attendees, they confirmed it is not a “done deal”, and that the eventual approach they take is dependent on the findings of the Skilled Person review. Firms were therefore warned to maintain adequate financial resources to cover any operational or remediation costs that may arise.
5. Time Frames: The pause has been introduced to determine whether the FCA need to take any action to ensure redress is provided in the right way and to reduce the risk of “disorderly”, “inefficient”, and “inconsistent” outcomes. They confirmed the review will include sales where a discretionary commission was paid to motor dealers between 6^th April 2007 and 27^th January 2021.
6. Record Retention: In line with SYCS 9.1, firms should keep an orderly record which includes services and transactions. Records should be kept that are or could be relevant to the complaint or claim dating before the 28^th January 2021. Where records have not been kept, firms should be undertaking a fact-finding exercise with the customer and lenders/brokers to obtain as much information to help with the investigation.
7. Time Barring Rules: The FOS has a general time limit of six years from the date of the event complained of, or three years from when the complainant was reasonably aware or ought to have known they had cause to complain. Today, the FCA confirmed that these rules are unchanged throughout the pause.

During the webinar, the FCA signposted the following useful link for firms to revert to: https://www.fca.org.uk/firms/information-firms-motor-finance-complaints. We encourage all firms to read through this to ensure they’re on track with the expectations of the FCA.

If you missed the webinar and would like to watch it on demand, click here: https://www.webinars.fca.org.uk/temporary-changes-to-handling-rules/cbc4a86af7c206fc88ef/join

If your firm requires support in shaping its optimal target operating model we have a comprehensive guide on creating a successful Complaints Targeting Operating Model. To discuss this matter further or to better prepare your firm with increased resource, then please reach out to Tom directly at tjeffery@square4.com.