Cheltenham, UK – Sentinel Legal, the leading authority on PCP claims, today responds to the latest announcement from the Financial Conduct Authority (FCA) regarding the motor finance market. The FCA's statement reveals an unexpected extension of the review period for historical discretionary commission arrangements (DCAs) in motor finance, pushing decisive action further into the future.

The FCA has now stated it will take an additional 12 months before determining the next steps, extending the temporary changes to the handling rules for motor finance complaints until December 4, 2025. This delay is both surprising and concerning, not only for the consumer but also for industry and the UK economy.

Key Points from the FCA Announcement:

Initial Pause: Starting in January 2024, the FCA paused the 8-week deadline for motor finance firms to respond to DCA complaints for 37 weeks, ending on September 25, 2024. This aimed to prevent inconsistent and inefficient outcomes while the FCA conducted diagnostic work.

Reasons for Delay:

Data Collection: Obtaining comprehensive data from firms has proven more complex and time-consuming than anticipated, as data is dispersed across multiple systems.
Litigation: Ongoing legal proceedings, including a judicial review involving Barclays Partner Finance, are impacting the timeline, potentially influencing the interpretation of laws and FCA rules.
Proposed Extension: The FCA proposes extending the pause until December 4, 2025, to complete diagnostic work, analyse data to determine if widespread consumer harm occurred, and design an appropriate redress scheme if necessary.

Consumer Impact: The extension means consumers may face longer waits for complaint resolutions. However, the FCA believes this approach will ultimately result in fairer and more consistent outcomes.
Next Steps: The FCA plans to outline the next steps by May 2025, including the potential for ending the pause earlier if feasible.

Sentinel Legal has provided extensive documentation to the FCA, by request, including detailed evidence of lender behaviour and commission contracts between lenders and dealers. These documents expose tactics used to disguise commissions and the manipulation of APR rates to benefit dealers at the expense of consumers.

Sentinel Legal’s Perspective and what this means for the consumer:

"The FCA's decision to delay action by another year is deeply disappointing," said Sam Ward, Director, at Sentinel Legal. "The evidence we've submitted clearly outlines the mis-selling practices in the motor finance industry. Any further delay only extends the period of injustice faced by consumers, potentially benefiting the financial institutions responsible for billions in mis-sold motor finance."

The FCA's prolonged review undermines consumer trust in the regulatory framework, especially given that the commission model in question was banned in 2021. The urgency to address the issue and provide compensation to affected consumers cannot be overstated.

The delay could significantly impact the UK economy by eroding consumer confidence and trust in financial institutions, as yet another scandal appears to be mishandled by the FCA. This lack of confidence could lead to a slowdown in car sales due to diminished trust in motor finance loans, especially considering that over 80% of cars on the road are financed.

The delay will affect current motor finance claims, leaving many consumers in prolonged uncertainty regarding their agreements and providers.

The financial sector may face increased compliance costs, which could be passed onto consumers, raising prices. Additionally, tighter credit conditions could decrease access to motor finance products, particularly for vulnerable individuals.

Ongoing regulatory scrutiny and litigation will place an unnecessary burden on the already strained judicial system, forcing local county courts to handle issues meant for specialised regulators. This could result in inconsistent outcomes, much like a lottery, further exacerbating consumer and market uncertainty.

Sentinel Legal calls for the FCA to expedite their review process and take immediate steps to rectify the harm caused by these practices. Decisive action is essential to restore confidence in the motor finance industry and ensure a more transparent and stable market, justice for consumers and economic stability.
For more details, read the full FCA statement here.

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Contact:
Kelly Lewins
PR and Communications

[email protected]
07960 937 800

About Sentinel Legal:
Sentinel Legal is dedicated to protecting consumer rights and ensuring fair practices in the financial services industry. We provide expert legal support and advocacy to address issues of mis-selling and regulatory non-compliance.

Note to Editors:
For further information or to arrange an interview with Sam Ward, please contact Kelly Lewins.