The UK financial watchdog says a motor finance consumer redress scheme "is more likely" than when it started its probe into this sector of the lending market.
Having previously stated that September would be the time to outline the next steps in its review of the historical use of discretionary commission arrangements (DCAs) in motor finance, the Financial Conduct Authority (FCA) announced today that this will be delayed until May 2025.
This delay is due to various issues, including a judicial review launched by Barclays into a decision by the Financial Ombudsman, and other problems lenders and brokers have faced in providing data.
By next May, the FCA said it expects to have analysed 14 years of data collected from firms and assessed the outcome of the Barclays judicial review of the ombudsman’s decision to uphold a DCA complaint.
"Our next steps could involve consulting on a redress scheme," the FCA said, which has led it to pause complaint handling until 4 December 2025.
"It is too early to say if we will intervene in this way, but based on our work so far, it is more likely than when we started our review,” the FCA added in a statement.
This pause in complaint handling is because, the regulator said, it may take longer to confirm how firms would make redress payments or could just see firms allowed to start dealing with complaints again as usual.
The UK motor finance market is used by over two million consumers a year, with major providers including Lloyds Banking Group PLC (LSE:LLOY), Close Brothers Group PLC (LSE:CBG) and Barclays PLC (LSE:BARC).
Lloyds shares fell 2%, while Close and Barclays were down around 0.5%.