Laura WilesThe House of Lords Financial Services Regulation Committee has written to the FCA asking it to clarify certain elements of its position on the motor finance commission cases, as set out in a letter dated 13 November 2024.
At the date of the FCA’s letter, only the Court of Appeal judgment had been handed down. Since then, the Supreme Court has granted Close Brothers and FirstRand Bank permission to appeal, and the FCA intends to request that it be allowed to share its expertise with the Court.
The Committee’s letter notes that ordinarily, these circumstances would engage the parliamentary rules on sub judice which prevent the House from discussing active proceedings. However, due to the importance of the issues raised, the Speaker has granted a waiver of the rule in the current circumstances, enabling the Committee and the FCA to continue correspondence notwithstanding the ongoing litigation.
The letter outlines the timeline which led to the FCA banning discretionary commission arrangements (DCAs) in 2021. It also highlights the FCA’s statement that the focus of the Court of Appeal decision was common law rather than FCA Rules or Principles, and the implication that this decision, if upheld by the Supreme Court, is in conflict with, or in material respects different from the FCA Rules and / or Principles. The Committee therefore asks the FCA:
- What are the relevant FCA Rules and Principles concerning both discretionary and fixed commissions; and
- Whether the FCA took legal advice both in connection with its 2021 decision to ban DCAs, and in connection with the above Rules and / or Principles?
- If so, in each case, the FCA is also asked to indicate when and from whom the advice was sought, and to provide in full the evidence of that advice.