DCA: Discretionary Commission Arrangements FAQ

Following the recent announcement from the FCA in relation to DCAs (Discretionary Commission Arrangements) and ahead of tomorrow’s ‘Temporary changes to handling rules for motor finance’ Webinar, Kind’s Selena Tye thought the following Frequently Asked Questions may come in handy.

Q: Our firm never did DCA’s, therefore we do not need to act, do we?

A: Firms need to be mindful that the scope of work may go further than just DCA’s, therefore think about any other arrangements that you have in place.  To head off unnecessary contact from customers and others in relation to DCA, you may want to make a statement in your website making it clear that your firm did not offer these.

Q: We know we have a problem with DCA, but we don’t know where to start?

A: A great start would be to:

  • Identify your timeline – when were DCA’s offered and for how long?
  • Identify your customers that are impacted.
  • Identify what your financial exposure could be, based upon recent FOS decisions.
  • Identify your resource and additional requirements.
  • Identify how you will engage do you keep the regulator informed.

Q: What if we are unable access data or the data quality is variable/not reliable

A: You need to quickly establish what you can do and what you are unable to do, create a methodology which enables you to proceed with confidence.

Q: How do we identify customers with BAU complaints who fall within the DCA population?

A: It is important that first line staff are fully trained on customer outcomes and can identify those that are affected.  You might want to think about a soft hand off process where these customers can be transferred to a specialist team to help further.

Q: With the timescales given to us by the regulator, normal business pressures and to give this the attention that’s needed, are there any quick wins that we can use?

A: Look back at previous projects that have impacted on your customers base, specifically around complaints and commission payments to see if there are any adaptable processes or metrices that you can use.

What about your current MI, is there anything that you can take from there to help with identification of customer cohorts.

Are you able to flex your current teams to accommodate increased work.  Setting up a project team to support will enable ring fenced specialist resourcing.

Q: How do we know if we are doing this right?

A: There will be support from internal compliance and audit teams who can assist with oversight and guidance over regulatory expectations. Think about reaching for external help to validate your internal findings and provide expert assistance.

Q: We need to engage with the regulator, how are we best to approach this.

A: Think about your PRIN 11 obligations and if you must make a notification, make sure you have a plan in place for rectification purposes.

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