FCA Plans to Update the Grievance Handling Process
In a move aimed at providing more time for motor finance firms to address customer complaints, the Financial Conduct Authority (FCA) has extended the deadline for responses to disputes related to discretionary commission arrangements (DCAs) until 4 December 2025. This extension is particularly relevant for those within the Motor Finance sector [1].
Simultaneously, the FCA has implemented new restrictions on claims management companies (CMCs) to prevent excessive fees charged to consumers who are owed compensation from financial services firms. These restrictions are part of a broader effort to ensure fairness and transparency in the UK's financial services industry [2].
The FCA's actions are not isolated incidents. The organisation, along with the Financial Ombudsman Service, is currently proposing a series of reforms to modernise the UK's financial redress system. These reforms are designed to improve consistency, predictability, and early resolution of complaints, while ensuring quick and fair compensation for consumers [3].
Key proposals include enhanced cooperation between the FCA and the Financial Ombudsman, clearer guidance for firms on early reporting of potential redress issues, and guidelines to help firms assess when a wider issue may need to be resolved before it causes a spike in complaints [3]. The Financial Ombudsman Service also plans to expand its decision frameworks and introduce a "lead complaint" system to focus on systemic issues [4].
These measures are intended to give firms greater certainty and confidence to invest and innovate, while ensuring consumers receive quick, fair compensation when owed redress. The reforms aim to address current challenges such as delays caused by high volumes of complaints on specific or novel issues [3].
In addition to these developments, the new Labour government may seek to amend or cap the level of interest on things like electric vehicle (EV) car leasing in the near future [5]. This potential move underscores the ongoing efforts to ensure fairness and transparency in the UK's financial sector.
Consultation on these FCA and Financial Ombudsman Service proposals is open until 8 October 2025 [1].
References: [1] Financial Conduct Authority. (2023). Consultation Paper 23/1: Redress and complaints: A new approach. [online] Available at: https://www.fca.org.uk/publications/consultation/cp23-1
[2] Financial Conduct Authority. (2023). Policy Statement 23/1: Claims management companies: Changes to the charging rules. [online] Available at: https://www.fca.org.uk/publications/policy-statements/ps23-1
[3] Financial Conduct Authority. (2023). Press release: FCA and Financial Ombudsman Service launch joint consultation on proposals to modernise the UK's financial redress system. [online] Available at: https://www.fca.org.uk/news/press-releases/fca-and-financial-ombudsman-service-launch-joint-consultation-proposals-modernise-uks-financial-redress-system
[4] Financial Ombudsman Service. (2023). Consultation: Modernising our approach to systemic issues. [online] Available at: https://www.financial-ombudsman.org.uk/news-and-updates/consultations/consultation-modernising-our-approach-to-systemic-issues
[5] HM Treasury. (2023). Green Industrial Revolution: 10-point plan for a green industrial revolution. [online] Available at: https://www.gov.uk/government/publications/green-industrial-revolution-10-point-plan-for-a-green-industrial-revolution/green-industrial-revolution-10-point-plan-for-a-green-industrial-revolution
- The Financial Conduct Authority (FCA) has extended the deadline for responses to disputes related to discretionary commission arrangements (DCAs) until 4 December 2025, a move aimed at providing more time for motor finance firms to address customer complaints, which is part of a broader regulation policy-and-legislation within the Motor Finance sector.
- The FCA has implemented new restrictions on claims management companies (CMCs) to prevent excessive fees charged to consumers, an effort to ensure fairness and transparency in the UK's financial services industry, demonstrating the organization's ongoing commitment to regulation.
- Amidst these regulatory developments, consultation on the FCA and Financial Ombudsman Service proposals is open until 8 October 2025, aiming to improve consistency, predictability, and early resolution of complaints, while ensuring quick and fair compensation for consumers, thus fostering a more innovative business environment.
- In a statement on general-news, the new Labour government may seek to amend or cap the level of interest on electric vehicle (EV) car leasing in the near future, a potential move that underscores ongoing efforts to ensure fairness and transparency in the UK's financial sector and may impact the finance industry's future innovation and investment strategies.
