FCA warning for motor finance firms

The latest FCA Dear CEO letter, published on the 12 April 2024, is a reminder to motor finance firms to maintain adequate financial resources.

 Due to the ongoing DCA complaints review, the FCA has discovered that firms are adopting different approaches to address the potential impact of past DCA usage on their financial resources. The FCA expects firms to assess their position. It anticipates this assessment should involve preparing for extra operational costs related to a rise in complaints and, where necessary, covering the costs of resolving those complaints.

The letter reiterates that all firm authorised under the Financial Services and Markets Act 2000 must meet the FCA’s Threshold Conditions and Principles for Businesses, which require firms to have appropriate resources (see COND 2.4 Appropriate resources and PRIN in the FCA handbook). The FCA has set out more detail in its framework for assessing adequate financial resources (FG 20/1), including the need to cover potential redress liabilities.