Tag: Consumer Protection

FCA’s Response to High Court Ruling on Motor Finance

The recent High Court judgment has clarified the regulatory landscape concerning discretionary commission arrangements (DCAs) in motor finance. This ruling is significant for consumers and financial firms alike, as it highlights the responsibilities of lenders and dealers in their commission disclosures. The Court sided with the Financial Ombudsman Service, reinforcing consumer protection in the financial services sector.

Judicial Review Outcome

On 17 December 2024, the High Court ruled in favor of the Financial Ombudsman Service regarding a complaint about a DCA within a motor finance agreement involving Barclays Partner Finance. The judgment dismissed all three grounds of appeal made by the lender, indicating a clear interpretation of the rules as set forth by the Financial Conduct Authority (FCA) and the Consumer Credit Act 1974.

Key Findings of the Judgment

The judgment emphasized that Barclays Partner Finance, along with the car dealer, failed to meet mandatory standards in their dealings with the borrower. Specifically, the Judge upheld the Financial Ombudsman’s stance that:

• The commission arrangements were not adequately disclosed to the borrower.
• The relationship between the lender and the borrower was assessed as unfair under existing regulations.

This ruling establishes a precedent for how DCAs should be handled, promoting transparency and fairness in motor finance agreements.

Ongoing FCA Review

The FCA is currently conducting a review of DCAs within the motor finance market, following a temporary ban implemented in 2021. The aim of this review is multifaceted:

• To investigate the prevalence of misconduct associated with DCAs.
• To determine if consumers have suffered losses due to inadequate disclosure practices.
• To recommend pathways for ensuring fair compensation for affected consumers.

In light of this ongoing review, firms were given additional time to respond to complaints regarding motor finance involving DCAs. This extension aims to ensure comprehensive and fair resolutions.

Implications of the Supreme Court Appeal

Alongside the High Court decision, the Supreme Court will hear an appeal related to three additional motor finance cases. These cases involve both DCAs and non-DCAs and pertain to the application of common law and equitable principles surrounding the Consumer Credit Act. The implications of this appeal are broad, affecting not only the current review but also the general understanding of compliance obligations for motor finance providers.

Anticipated Changes in Industry Practices

Following the Court of Appeal’s ruling, firms in the motor finance sector can expect an influx of complaints regarding DCAs as well as non-DCA transactions. To manage this effectively, the FCA has proposed extensions to the response time for dealing with such complaints. This measure aims to maintain order and consistency in resolving disputes between consumers and firms.

Next Steps in Regulation

The FCA plans to announce its policy statement by 19 December 2024, outlining the outcome of its consultation regarding the extension of time for complaints related to non-DCAs. Furthermore, the FCA intends to outline future steps in its DCA review by May 2025. However, the progress of the Supreme Court appeal may influence the specifics of these advancements.

Conclusion

The High Court’s ruling and ongoing FCA review are critical in reshaping the landscape of motor finance, reinforcing the necessity for transparent practices in commission arrangements. With regulatory scrutiny increasing, firms must reassess their compliance frameworks to align with evolving standards. Stakeholders are encouraged to reflect on their practices and consider the potential impacts of these judicial decisions.

For businesses needing guidance on compliance in the regulatory landscape, seeking expert support is crucial. Contact us for tailored assistance on navigating these changes and ensuring adherence to FCA regulations. Contact Us today.

References

FCA responds to High Court motor finance judicial review decision

Understanding the FSCS Management Expenses Levy Limit for 2025/26

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a Management Expenses Levy Limit (MELL) of £108.6m for the Financial Services Compensation Scheme (FSCS) for 2025/26. This levy comprises a management expenses budget of £103.6m and an unlevied reserve of £5m.

Key Changes and Budget Overview

The proposed MELL represents a modest 0.5% increase (£0.5m) from the 2024/25 limit of £108.1m. Notably, the FSCS is absorbing approximately £2.7m of inflationary costs, making the actual levy lower in real terms. The management expenses budget covers essential operating costs including IT infrastructure, staffing, outsourcing, legal services, and claims handling.

Budget Allocation and Cost Management

Key budgetary changes for 2025/26 include:

• Staff costs increase of 5% (£2.5m)
• IT costs rise of 7% (£0.5m)
• Professional and legal fees reduction of 8% (£0.8m)
• Outsourced claims handling decrease of 13% (£1.8m)

Operational Changes and Efficiency Measures

The FSCS is implementing a new hybrid operating model from April 2025, bringing most claims processing in-house while partnering with PwC for remaining claims. This strategic shift aims to improve service quality, strengthen core processes, and achieve long-term cost efficiencies.

Funding Structure and Industry Impact

The management expenses budget is allocated across FCA and PRA firms through:

• Base costs of £36.9m (split 50/50 between FCA and PRA regulatory fee blocks)
• Specific costs of £66.7m (allocated based on claims volumes and types)

The FCA funding class allocation is set to increase by £0.7m to £63.2m, while the PRA funding class allocation will decrease by £0.2m to £40.4m.

Consumer Protection and Market Confidence

The FSCS plays a crucial role in maintaining consumer confidence in financial services by providing compensation when authorized firms fail. For 2025/26, the FSCS forecasts compensation payments of £367m, demonstrating its vital consumer protection function.

Seeking Professional Compliance Support

Understanding and preparing for regulatory levies can be complex. For guidance on how these changes might affect your firm and ensuring compliance with regulatory requirements, contact our regulatory experts for specialized support.

References

CP25/1: Financial Services Compensation Scheme – Management Expenses Levy Limit 2025/26
[pdf]

Understanding the FSCS Management Expenses Levy Limit for 2025/26

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a Management Expenses Levy Limit (MELL) of £108.6m for the Financial Services Compensation Scheme (FSCS) for 2025/26. This levy comprises a management expenses budget of £103.6m and an unlevied reserve of £5m.

Key Changes and Budget Overview

The proposed MELL represents a modest 0.5% increase (£0.5m) from the 2024/25 limit of £108.1m. Notably, the FSCS is absorbing approximately £2.7m of inflationary costs, making the actual levy lower in real terms. The management expenses budget covers essential operating costs including IT infrastructure, staffing, outsourcing, legal services, and claims handling.

Budget Allocation and Cost Management

Key budgetary changes for 2025/26 include:

• Staff costs increase of 5% (£2.5m)
• IT costs rise of 7% (£0.5m)
• Professional and legal fees reduction of 8% (£0.8m)
• Outsourced claims handling decrease of 13% (£1.8m)

Operational Changes and Efficiency Measures

The FSCS is implementing a new hybrid operating model from April 2025, bringing most claims processing in-house while partnering with PwC for remaining claims. This strategic shift aims to improve service quality, strengthen core processes, and achieve long-term cost efficiencies.

Funding Structure and Industry Impact

The management expenses budget is allocated across FCA and PRA firms through:

• Base costs of £36.9m (split 50/50 between FCA and PRA regulatory fee blocks)
• Specific costs of £66.7m (allocated based on claims volumes and types)

The FCA funding class allocation is set to increase by £0.7m to £63.2m, while the PRA funding class allocation will decrease by £0.2m to £40.4m.

Consumer Protection and Market Confidence

The FSCS plays a crucial role in maintaining consumer confidence in financial services by providing compensation when authorized firms fail. For 2025/26, the FSCS forecasts compensation payments of £367m, demonstrating its vital consumer protection function.

Seeking Professional Compliance Support

Understanding and preparing for regulatory levies can be complex. For guidance on how these changes might affect your firm and ensuring compliance with regulatory requirements, contact our regulatory experts for specialized support.

References

CP25/1: Financial Services Compensation Scheme – Management Expenses Levy Limit 2025/26
[pdf]

Understanding the FSCS Management Expenses Levy Limit for 2025/26

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a Management Expenses Levy Limit (MELL) of £108.6m for the Financial Services Compensation Scheme (FSCS) for 2025/26. This levy comprises a management expenses budget of £103.6m and an unlevied reserve of £5m.

Key Changes and Budget Overview

The proposed MELL represents a modest 0.5% increase (£0.5m) from the 2024/25 limit of £108.1m. Notably, the FSCS is absorbing approximately £2.7m of inflationary costs, making the actual levy lower in real terms. The management expenses budget covers essential operating costs including IT infrastructure, staffing, outsourcing, legal services, and claims handling.

Budget Allocation and Cost Management

Key budgetary changes for 2025/26 include:

• Staff costs increase of 5% (£2.5m)
• IT costs rise of 7% (£0.5m)
• Professional and legal fees reduction of 8% (£0.8m)
• Outsourced claims handling decrease of 13% (£1.8m)

Operational Changes and Efficiency Measures

The FSCS is implementing a new hybrid operating model from April 2025, bringing most claims processing in-house while partnering with PwC for remaining claims. This strategic shift aims to improve service quality, strengthen core processes, and achieve long-term cost efficiencies.

Funding Structure and Industry Impact

The management expenses budget is allocated across FCA and PRA firms through:

• Base costs of £36.9m (split 50/50 between FCA and PRA regulatory fee blocks)
• Specific costs of £66.7m (allocated based on claims volumes and types)

The FCA funding class allocation is set to increase by £0.7m to £63.2m, while the PRA funding class allocation will decrease by £0.2m to £40.4m.

Consumer Protection and Market Confidence

The FSCS plays a crucial role in maintaining consumer confidence in financial services by providing compensation when authorized firms fail. For 2025/26, the FSCS forecasts compensation payments of £367m, demonstrating its vital consumer protection function.

Seeking Professional Compliance Support

Understanding and preparing for regulatory levies can be complex. For guidance on how these changes might affect your firm and ensuring compliance with regulatory requirements, contact our regulatory experts for specialized support.

References

CP25/1: Financial Services Compensation Scheme – Management Expenses Levy Limit 2025/26
[pdf]

Understanding the FSCS Management Expenses Levy Limit for 2025/26

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a Management Expenses Levy Limit (MELL) of £108.6m for the Financial Services Compensation Scheme (FSCS) for 2025/26. This levy comprises a management expenses budget of £103.6m and an unlevied reserve of £5m.

Key Changes and Budget Overview

The proposed MELL represents a modest 0.5% increase (£0.5m) from the 2024/25 limit of £108.1m. Notably, the FSCS is absorbing approximately £2.7m of inflationary costs, making the actual levy lower in real terms. The management expenses budget covers essential operating costs including IT infrastructure, staffing, outsourcing, legal services, and claims handling.

Budget Allocation and Cost Management

Key budgetary changes for 2025/26 include:

• Staff costs increase of 5% (£2.5m)
• IT costs rise of 7% (£0.5m)
• Professional and legal fees reduction of 8% (£0.8m)
• Outsourced claims handling decrease of 13% (£1.8m)

Operational Changes and Efficiency Measures

The FSCS is implementing a new hybrid operating model from April 2025, bringing most claims processing in-house while partnering with PwC for remaining claims. This strategic shift aims to improve service quality, strengthen core processes, and achieve long-term cost efficiencies.

Funding Structure and Industry Impact

The management expenses budget is allocated across FCA and PRA firms through:

• Base costs of £36.9m (split 50/50 between FCA and PRA regulatory fee blocks)
• Specific costs of £66.7m (allocated based on claims volumes and types)

The FCA funding class allocation is set to increase by £0.7m to £63.2m, while the PRA funding class allocation will decrease by £0.2m to £40.4m.

Consumer Protection and Market Confidence

The FSCS plays a crucial role in maintaining consumer confidence in financial services by providing compensation when authorized firms fail. For 2025/26, the FSCS forecasts compensation payments of £367m, demonstrating its vital consumer protection function.

Seeking Professional Compliance Support

Understanding and preparing for regulatory levies can be complex. For guidance on how these changes might affect your firm and ensuring compliance with regulatory requirements, contact our regulatory experts for specialized support.

References

CP25/1: Financial Services Compensation Scheme – Management Expenses Levy Limit 2025/26
[pdf]

Understanding the FSCS Management Expenses Levy Limit for 2025/26

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a Management Expenses Levy Limit (MELL) of £108.6m for the Financial Services Compensation Scheme (FSCS) for 2025/26. This levy comprises a management expenses budget of £103.6m and an unlevied reserve of £5m.

Key Changes and Budget Overview

The proposed MELL represents a modest 0.5% increase (£0.5m) from the 2024/25 limit of £108.1m. Notably, the FSCS is absorbing approximately £2.7m of inflationary costs, making the actual levy lower in real terms. The management expenses budget covers essential operating costs including IT infrastructure, staffing, outsourcing, legal services, and claims handling.

Budget Allocation and Cost Management

Key budgetary changes for 2025/26 include:

• Staff costs increase of 5% (£2.5m)
• IT costs rise of 7% (£0.5m)
• Professional and legal fees reduction of 8% (£0.8m)
• Outsourced claims handling decrease of 13% (£1.8m)

Operational Changes and Efficiency Measures

The FSCS is implementing a new hybrid operating model from April 2025, bringing most claims processing in-house while partnering with PwC for remaining claims. This strategic shift aims to improve service quality, strengthen core processes, and achieve long-term cost efficiencies.

Funding Structure and Industry Impact

The management expenses budget is allocated across FCA and PRA firms through:

• Base costs of £36.9m (split 50/50 between FCA and PRA regulatory fee blocks)
• Specific costs of £66.7m (allocated based on claims volumes and types)

The FCA funding class allocation is set to increase by £0.7m to £63.2m, while the PRA funding class allocation will decrease by £0.2m to £40.4m.

Consumer Protection and Market Confidence

The FSCS plays a crucial role in maintaining consumer confidence in financial services by providing compensation when authorized firms fail. For 2025/26, the FSCS forecasts compensation payments of £367m, demonstrating its vital consumer protection function.

Seeking Professional Compliance Support

Understanding and preparing for regulatory levies can be complex. For guidance on how these changes might affect your firm and ensuring compliance with regulatory requirements, contact our regulatory experts for specialized support.

References

CP25/1: Financial Services Compensation Scheme – Management Expenses Levy Limit 2025/26
[pdf]

FCA’s Response to High Court Ruling on Motor Finance

The recent High Court judgment has clarified the regulatory landscape concerning discretionary commission arrangements (DCAs) in motor finance. This ruling is significant for consumers and financial firms alike, as it highlights the responsibilities of lenders and dealers in their commission disclosures. The Court sided with the Financial Ombudsman Service, reinforcing consumer protection in the financial services sector.

Judicial Review Outcome

On 17 December 2024, the High Court ruled in favor of the Financial Ombudsman Service regarding a complaint about a DCA within a motor finance agreement involving Barclays Partner Finance. The judgment dismissed all three grounds of appeal made by the lender, indicating a clear interpretation of the rules as set forth by the Financial Conduct Authority (FCA) and the Consumer Credit Act 1974.

Key Findings of the Judgment

The judgment emphasized that Barclays Partner Finance, along with the car dealer, failed to meet mandatory standards in their dealings with the borrower. Specifically, the Judge upheld the Financial Ombudsman’s stance that:

• The commission arrangements were not adequately disclosed to the borrower.
• The relationship between the lender and the borrower was assessed as unfair under existing regulations.

This ruling establishes a precedent for how DCAs should be handled, promoting transparency and fairness in motor finance agreements.

Ongoing FCA Review

The FCA is currently conducting a review of DCAs within the motor finance market, following a temporary ban implemented in 2021. The aim of this review is multifaceted:

• To investigate the prevalence of misconduct associated with DCAs.
• To determine if consumers have suffered losses due to inadequate disclosure practices.
• To recommend pathways for ensuring fair compensation for affected consumers.

In light of this ongoing review, firms were given additional time to respond to complaints regarding motor finance involving DCAs. This extension aims to ensure comprehensive and fair resolutions.

Implications of the Supreme Court Appeal

Alongside the High Court decision, the Supreme Court will hear an appeal related to three additional motor finance cases. These cases involve both DCAs and non-DCAs and pertain to the application of common law and equitable principles surrounding the Consumer Credit Act. The implications of this appeal are broad, affecting not only the current review but also the general understanding of compliance obligations for motor finance providers.

Anticipated Changes in Industry Practices

Following the Court of Appeal’s ruling, firms in the motor finance sector can expect an influx of complaints regarding DCAs as well as non-DCA transactions. To manage this effectively, the FCA has proposed extensions to the response time for dealing with such complaints. This measure aims to maintain order and consistency in resolving disputes between consumers and firms.

Next Steps in Regulation

The FCA plans to announce its policy statement by 19 December 2024, outlining the outcome of its consultation regarding the extension of time for complaints related to non-DCAs. Furthermore, the FCA intends to outline future steps in its DCA review by May 2025. However, the progress of the Supreme Court appeal may influence the specifics of these advancements.

Conclusion

The High Court’s ruling and ongoing FCA review are critical in reshaping the landscape of motor finance, reinforcing the necessity for transparent practices in commission arrangements. With regulatory scrutiny increasing, firms must reassess their compliance frameworks to align with evolving standards. Stakeholders are encouraged to reflect on their practices and consider the potential impacts of these judicial decisions.

For businesses needing guidance on compliance in the regulatory landscape, seeking expert support is crucial. Contact us for tailored assistance on navigating these changes and ensuring adherence to FCA regulations. Contact Us today.

References

FCA responds to High Court motor finance judicial review decision

Understanding the FSCS Management Expenses Levy Limit for 2025/26

The Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have proposed a Management Expenses Levy Limit (MELL) of £108.6m for the Financial Services Compensation Scheme (FSCS) for 2025/26. This levy comprises a management expenses budget of £103.6m and an unlevied reserve of £5m.

Key Changes and Budget Overview

The proposed MELL represents a modest 0.5% increase (£0.5m) from the 2024/25 limit of £108.1m. Notably, the FSCS is absorbing approximately £2.7m of inflationary costs, making the actual levy lower in real terms. The management expenses budget covers essential operating costs including IT infrastructure, staffing, outsourcing, legal services, and claims handling.

Budget Allocation and Cost Management

Key budgetary changes for 2025/26 include:

• Staff costs increase of 5% (£2.5m)
• IT costs rise of 7% (£0.5m)
• Professional and legal fees reduction of 8% (£0.8m)
• Outsourced claims handling decrease of 13% (£1.8m)

Operational Changes and Efficiency Measures

The FSCS is implementing a new hybrid operating model from April 2025, bringing most claims processing in-house while partnering with PwC for remaining claims. This strategic shift aims to improve service quality, strengthen core processes, and achieve long-term cost efficiencies.

Funding Structure and Industry Impact

The management expenses budget is allocated across FCA and PRA firms through:

• Base costs of £36.9m (split 50/50 between FCA and PRA regulatory fee blocks)
• Specific costs of £66.7m (allocated based on claims volumes and types)

The FCA funding class allocation is set to increase by £0.7m to £63.2m, while the PRA funding class allocation will decrease by £0.2m to £40.4m.

Consumer Protection and Market Confidence

The FSCS plays a crucial role in maintaining consumer confidence in financial services by providing compensation when authorized firms fail. For 2025/26, the FSCS forecasts compensation payments of £367m, demonstrating its vital consumer protection function.

Seeking Professional Compliance Support

Understanding and preparing for regulatory levies can be complex. For guidance on how these changes might affect your firm and ensuring compliance with regulatory requirements, contact our regulatory experts for specialized support.

References

CP25/1: Financial Services Compensation Scheme – Management Expenses Levy Limit 2025/26
[pdf]

FCA’s Response to High Court Ruling on Motor Finance

The recent High Court judgment has clarified the regulatory landscape concerning discretionary commission arrangements (DCAs) in motor finance. This ruling is significant for consumers and financial firms alike, as it highlights the responsibilities of lenders and dealers in their commission disclosures. The Court sided with the Financial Ombudsman Service, reinforcing consumer protection in the financial services sector.

Judicial Review Outcome

On 17 December 2024, the High Court ruled in favor of the Financial Ombudsman Service regarding a complaint about a DCA within a motor finance agreement involving Barclays Partner Finance. The judgment dismissed all three grounds of appeal made by the lender, indicating a clear interpretation of the rules as set forth by the Financial Conduct Authority (FCA) and the Consumer Credit Act 1974.

Key Findings of the Judgment

The judgment emphasized that Barclays Partner Finance, along with the car dealer, failed to meet mandatory standards in their dealings with the borrower. Specifically, the Judge upheld the Financial Ombudsman’s stance that:

• The commission arrangements were not adequately disclosed to the borrower.
• The relationship between the lender and the borrower was assessed as unfair under existing regulations.

This ruling establishes a precedent for how DCAs should be handled, promoting transparency and fairness in motor finance agreements.

Ongoing FCA Review

The FCA is currently conducting a review of DCAs within the motor finance market, following a temporary ban implemented in 2021. The aim of this review is multifaceted:

• To investigate the prevalence of misconduct associated with DCAs.
• To determine if consumers have suffered losses due to inadequate disclosure practices.
• To recommend pathways for ensuring fair compensation for affected consumers.

In light of this ongoing review, firms were given additional time to respond to complaints regarding motor finance involving DCAs. This extension aims to ensure comprehensive and fair resolutions.

Implications of the Supreme Court Appeal

Alongside the High Court decision, the Supreme Court will hear an appeal related to three additional motor finance cases. These cases involve both DCAs and non-DCAs and pertain to the application of common law and equitable principles surrounding the Consumer Credit Act. The implications of this appeal are broad, affecting not only the current review but also the general understanding of compliance obligations for motor finance providers.

Anticipated Changes in Industry Practices

Following the Court of Appeal’s ruling, firms in the motor finance sector can expect an influx of complaints regarding DCAs as well as non-DCA transactions. To manage this effectively, the FCA has proposed extensions to the response time for dealing with such complaints. This measure aims to maintain order and consistency in resolving disputes between consumers and firms.

Next Steps in Regulation

The FCA plans to announce its policy statement by 19 December 2024, outlining the outcome of its consultation regarding the extension of time for complaints related to non-DCAs. Furthermore, the FCA intends to outline future steps in its DCA review by May 2025. However, the progress of the Supreme Court appeal may influence the specifics of these advancements.

Conclusion

The High Court’s ruling and ongoing FCA review are critical in reshaping the landscape of motor finance, reinforcing the necessity for transparent practices in commission arrangements. With regulatory scrutiny increasing, firms must reassess their compliance frameworks to align with evolving standards. Stakeholders are encouraged to reflect on their practices and consider the potential impacts of these judicial decisions.

For businesses needing guidance on compliance in the regulatory landscape, seeking expert support is crucial. Contact us for tailored assistance on navigating these changes and ensuring adherence to FCA regulations. Contact Us today.

References

FCA responds to High Court motor finance judicial review decision