FCA changes to car loans and how to get refunds

FCA makes changes to “Discretionary Commission Arrangements” for car loans

The Financial Conduct Authority (FCA) has announced (11 January 2024) changes to the Discretionary Commission Arrangements (DCAs). This is a structure which determines the level of commission a loan broker (car dealer) receives. This follows the Financial Ombudsman publishing decisions on two finance lenders. Black Horse and Barclays Partner Finance.

Under the DCA, a higher rate of interest rate paid by the borrower will result in a higher amount of commission for the broker. These arrangements created an incentive for brokers to raise the interest rate, thereby increasing the amount borrowers were charged for their car loans.

The FCA banned this practice in 2021.

But since then there has been an increase in complaints about the behaviour of companies lending for car purchase. The FCA has now placed a temporary hold on its complaints process, pausing the 8-week deadline for firms to respond. During this pause the FCA will be investigating the issues and decide what, if any, further action, including legal steps, are necessary.

This pause will apply to complaints received by firms between 17 November 2023 and 25 September 2024. This pause is to stop Claims Management Companies (CMCs) making complaint claims and doing very little work. (There are parallels with the behaviour of CMCs during the the PPI scandal).

The Government has announced proposals to impose fees on CMCs and lawyers for bringing complaints to the Financial Ombudsman Service. The Financial Services and Markets Act 2000 (The Ombudsman Scheme) Regulations 2024 – Draft SI and Policy Note.

For more information, how this affects you and what you should do, see FCA to undertake work in the motor finance market. Always remember that you can make these complaints yourself and ensure you get 100% of the money.

How to find out if you are owed money

Car finance FREE reclaim tool & guide

Are you due £1,000s back from the hidden discretionary commission scandal? This is a tool on the MSE website that will show you if you are owed money and how to claim.

More help and advice on car purchasing and using garages

Car buyers alert: how not to get fobbed off

How not to get fobbed off by a garage (and what to do if you have been!)

All you need to know about car purchasing, financing and garages

How to complain about financial institutions

Further help with consumer issues

Top 20 Tips How to complain effectively

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If you need more help, information and tips with how to quote Acts, template letters and advice on how to complain effectively don’t forget the GET THE BOOK! How To Complain: The ESSENTIAL Consumer Guide to Getting REFUNDS, Redress and RESULTS!

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101 Habits of an Effective Complainer provides you with more tips

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Purchase and download templates to gain redress swiftly

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