Lucy HadrillFollowing the announcement of its review into motor finance complaints, the FCA has published a statement on progress made to date. It says that firms have engaged with the FCA constructively but many are struggling to promptly provide the data the FCA needs. This is largely because the data is stored on multiple systems or is spread between lenders and brokers. However, in some older cases, firms have not retained all relevant records.
The FCA will set out next steps by 24 September 2024 at the latest and will extend the review and complaint pause if necessary.
In the meantime, the FCA has written to firms to remind them of the need to maintain adequate financial resources at all times. The Dear CEO letter sets out the FCA’s expectation that relevant firms must, with immediate effect:
- assess the adequacy of their financial resources. The assessment:
- should be proportionate to the scale and complexity of a firm’s regulated activities;
- must be forward looking;
- must consider the risks and potential liabilities the firm is exposed to (including any potential redress liabilities);
- ensure accuracy of financial statements and regulatory reporting;
- make adequate disclosures to the FCA in accordance with Principle 11. Firms must:
- notify the FCA immediately if they are unlikely to have adequate financial resources in the foreseeable future and before they take action that could materially impact capital positions or other decisions that could result in serious customer detriment;
- notify the FCA if the firm is 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;
- make adequate disclosures to group stakeholders (if applicable);
- deal with discretionary commission arrangement complaints and subject access requests appropriately.
