The Financial Conduct Authority (FCA) has recently expressed its gratitude for the cooperation of firms in their review of historical motor finance commission arrangements and sales. At the same time, the FCA has urged all firms to ensure that they have sufficient financial resources to address potential liabilities and operational costs.
This call to action comes as the FCA plans to outline its next steps by 24th September, contingent on the ability of firms to provide comprehensive and prompt data. Additionally, the FCA has highlighted the importance of firms maintaining financial resources at all times, particularly in light of recent measures taken by Lloyds and Close Brothers to strengthen their finances amidst the ongoing financial review.
The FCA’s latest publication reiterated the expectation for firms to prepare for any additional operational costs arising from complaints and the resolution of such complaints. As a result, firms are expected to notify the FCA if they anticipate a shortage of adequate financial resources. It is crucial for firms to consider the impact of any reduction in capital on their ability to meet potential liabilities stemming from the historical use of DCA arrangements.
Furthermore, the FCA has emphasised the need for firms to continue investigating complaints involving a DCA in order to promptly address and resolve customer concerns once complaint handling activities are reinstated. The regulatory body has also underscored its commitment to monitoring the financial resources held by firms and intervening if it perceives that firms have not adequately assessed their financial resources, are at risk of lacking sufficient financial resources, or are engaging in actions designed to evade potential future liabilities.
It is clear that the FCA’s communication aims to remind firms of their obligation to ensure the adequacy of their financial resources, particularly in the context of ongoing regulatory scrutiny and potential liabilities that may arise from historical financial arrangements and consumer complaints. This serves as a decisive reminder for firms to proactively maintain and monitor their financial resources while complying with regulatory expectations.
As firms navigate through the evolving regulatory landscape, it is imperative for them to remain diligent in evaluating their financial resources and promptly responding to any concerns brought forth by regulatory authorities. By adhering to these guidelines, firms can uphold financial stability and enhance their ability to address potential liabilities and operational costs effectively.