FCA urges firms to ensure adequacy of financial resources

By automotive-mag.com 2 Min Read

Amidst its review of historical motor finance commission arrangements and sales, the FCA has expressed gratitude for firms’ ‘constructive engagement’ and urges all to ensure they have adequate financial resources.

The FCA expects to set out its next steps by 24 September but states that this depends on the ability of firms to provide data comprehensively and promptly.

In light of firms making changes to account for the potential impact on their financial resources, the FCA has reminded others to maintain financial resources at all times.

Most recently, Lloyds and Close Brothers took measures to strengthen their finances amidst the FCA’s financial review.

The FCA’s latest publication reiterates that firms are expected to plan for any additional operational costs from complaints and meeting the costs of resolving complaints, where applicable. For this reason, firms are expected to notify the FCA if they are unlikely to have adequate financial resources.

The impact of any capital reduction on a firm’s ability to meet potential liabilities that may arise from historic use of DCA arrangements should be considered.

Firms should also continue investigating complaints involving a DCA to ensure they can act quickly to resolve complaints if complaint handling resumes.

The FCA are monitoring financial resources held by firms and will intervene if it appears that firms have not assessed the adequacy of financial resources, if firms are at risk of not having adequate financial resources or if it identifies actions that appear to be an attempt to ‘avoid potential future liabilities’.

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