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Ask the Experts: How Can Motor Finance Companies Respond to the FCA’s Investigation of DCAs?

Ask the Experts: How Can Motor Finance Companies Respond to the FCA’s Investigation of DCAs?


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Ask the Experts: How Can Motor Finance Companies Respond to the FCA’s Investigation of DCAs?

10 Apr 2024

Jack NichollsAdam Dance


  • Expert Reaction: Adam Dance and Jack Nicholls, Aptean Respond
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In January 2024, the UK Financial Conduct Authority (FCA) announced it would investigate the use and terms of discretionary commission agreements (DCAs) in motor finance lending.

To better understand how this investigation will impact motor finance companies, we spoke with our own Adam Dance and Jack Nicholls from Aptean Respond.

As Account Managers for Aptean’s purpose-built complaints management system, they are conversing with lenders on a daily basis and staying up to date with the FCA’s enquiry into DCA complaints handling.

Before We Begin: The Story in 60 Seconds

DCAs are made between lenders and credit brokers. They give brokers the discretion to determine interest rates for customers purchasing vehicles. In some instances, this created opportunities for brokers to set high interest rates and therefore earn a larger commission from the lender.

In January 2021, the FCA officially banned the use of DCAs in the motor finance market. Since then, many customers have filed complaints and claims against motor finance firms, demanding compensation for their inflated interest rates. The majority of these complaints have been rejected, which has prompted the FCA to step in and investigate.

Q: DCA legislation changed more than three years ago. Why is it such a hot topic right now?

Adam Dance (AD): There are two reasons why DCAs are an important topic at the moment.

Firstly, there’s a lot of media coverage around the story, driven mainly by Martin Lewis (of, which is spiking consumer interest. The motor finance companies I’ve spoken to have noticed a massive increase in the number of complaints they’re getting.

Secondly, the FCA is now investigating the complaints process, so there could be implications for compliance.

Jack Nicholls (JN): The FCA only recently started looking into it, so it's going to take time to investigate. They're still encouraging companies to log their complaints, but there'll be a pause until September for the FCA to rule on the response.

Q: Why is the FCA investigation such a pain point for motor finance lenders?

JN: Many motor finance lenders can’t manage the huge volume of complaints coming in. We have spoken with companies that typically handle 500 complaints a week that have received 100,000+ complaints in just two weeks.

When the FCA concludes its investigation, motor finance firms need to respond to this huge volume of complaints quickly, and lenders may not currently have the complaints management system in place to do this.

AD: It may not just be a pure complaint handling exercise, either. All the signs point to the FCA recommending some form of remediation exercise, so lenders will have to contact all their affected customers and offer them compensation.

Q: How can motor finance companies get ‘ahead of the game’ before the FCA investigation concludes?

JN: They need to accurately and securely capture all DCA complaints now, ready for the next step. Sticking them in a spreadsheet or general customer relationship management (CRM) system could create significant challenges and overheads come September. It’s also a risky approach, as data could go missing or logistical issues could mean compliance deadlines get missed.

Investing in software like Aptean Respond now will help motor finance lenders to manage the influx of DCA complaints alongside business-as-usual complaints.

AD: They’ve also got to prepare for a likely remediation exercise, and Aptean Respond has a remediation solution that can help. If lenders wait until the FCA shares its outcomes to invest in remediation tools, they’re already on the back foot. Implementing Aptean Respond for potential DCA remediation alongside their existing complaints handling software will minimize business disruption.

We’ve already helped financial services companies manage the FCA’s 2019 Payment Protection Insurance (PPI) complaints deadline. So, we know Aptean Respond is able to manage both a huge influx of complaints and a major remediation programme, efficiently and cost-effectively.

Q: Any final words for lenders concerned about managing their DCA complaints?

AD: Complaints management software isn’t just a tool for large companies. Since the media coverage of the FCA’s investigation into DCAs exploded, we’ve heard from smaller companies whose complaints volumes have grown from 1,000 to 10,000 in a couple of months. You can’t deal with that number of complaints effectively with a spreadsheet or an internal CRM system.

JN: Investing in Aptean Respond now will enable these companies to log DCA complaints accurately in a central system. Then they’re ready to deal with them come September, so the response process is much less painful.

AD: Bigger companies also need to consider whether their current complaints management system can cope with a large-scale response to the FCA investigation. There’s a real competitive advantage to be gained from implementing Aptean Respond as a dedicated system to handle all DCA-related complaints, even if they’re using an existing system for business-as-usual complaints.

Why Is Aptean Respond the Ideal Software To Manage Motor Finance Complaints and Remediation?

Aptean Respond is an all-in-one complaints management, compliance and process improvement platform for motor finance firms.

Our software streamlines, simplifies and speeds up complaints management, ensuring FCA compliance and evidencing it every step of the way.

  • 60% of leading car finance, banks and insurers trust Aptean Respond to manage their complaints handling operations—including MotoNovo Finance

  • 56% of FCA complaints are handled by Aptean Respond to maintain compliance

Aptean’s technology consultants are experts in regulatory compliance and have over 30 years’ experience helping financial service companies to improve complaint handling and remediation

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