FCA warns motor finance firms on resources

The Financial Conduct Authority has written motor finance firms to remind them they must maintain adequate financial resources at all times. The warning comes in the midst of the regulator’s review into the historical use of motor finance discretionary commission arrangements.

The FCA said: “While each firm will need to examine its own specific circumstances, we expect this would include planning for any additional operational costs from increased complaints and, where applicable, to meet the costs of resolving those complaints.”

Darren Richards, chief executive of actuarial and redress consultancy OAC, added: “Today’s FCA update on motor firms’ financial resources is a reminder of the inherent complexities and potential scale of this review.

“The FCA explicitly notes that firms will need to begin planning to meet the costs of resolving consumer complaints which have increased due to public attention. It is evident that the review of these historical cases will be complex and time consuming if the outcome of the FCA’s review and any legal challenges conclude with firms having to redress their customers.”

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