The precise mechanism and dynamics of charge generation and recombination in bulk heterojunction polymer:fullerene blend films typically used in organic photovoltaic devices have been intensively studied by many research groups, but nonetheless remain debated. In particular the role of interfacial charge-transfer (CT) states in the generation of free charge carriers, an important step for the understanding of device function, is still under active discussion. In this article we present direct optical probes of the exciton dynamics in pristine films of a prototypic polycarbazole-based photovoltaic donor polymer, namely poly[N-11''-henicosanyl-2,7-carbazole-alt-5,5-(4',7'-di-2-thienyl-2',1',3'-benzothiadiazole)] (PCDTBT), as well as the charge generation and recombination dynamics in as-cast and annealed photovoltaic blend films using methanofullerene (PC(61)BM) as electron acceptor. In contrast to earlier studies we use broadband (500-1100 nm) transient absorption spectroscopy including the previously unobserved but very important time range between 2 ns and 1 ms, which allows us not only to observe the entire charge carrier recombination dynamics but also to quantify the existing decay channels. We determine that ultrafast exciton dissociation occurs in blends and leads to two separate pools of products, namely Coulombically bound charge-transfer (CT) states and unbound (free) charge carriers. The recombination dynamics are analyzed within the framework of a previously reported model for poly(3-hexylthiophene):PCBM (Howard, I. A. J. Am. Chem. Soc. 2010, 132, 14866) based on concomitant geminate recombination of CT states and nongeminate recombination of free charge carriers. The results reveal that only ~11% of the initial photoexcitations generate interfacial CT states that recombine exclusively by fast nanosecond geminate recombination and thus do not contribute to the photocurrent, whereas ~89% of excitons create free charge carriers on an ultrafast time scale that then contribute to the extracted photocurrent. Despite the high yield of free charges the power conversion efficiency of devices remains moderate at about 3.0%. This is largely a consequence of the low fill factor of devices. We relate the low fill factor to significant energetic disorder present in the pristine polymer and in the polymer:fullerene blends. In the former we observed a significant spectral relaxation of exciton emission (fluorescence) and in the latter of the polaron-induced ground-state bleaching, implying that the density of states (DOS) for both excitons and charge carriers is significantly broadened by energetic disorder in pristine PCDTBT and in its blend with PCBM. This disorder leads to charge trapping in solar cells, which in turn causes higher carrier concentrations and more significant nongeminate recombination. The nongeminate recombination has a significant impact on the IV curves of devices, namely its competition with charge carrier extraction causes a stronger bias dependence of the photocurrent of devices, in turn leading to the poor device fill factor. In addition our results demonstrate the importance of ultrafast free carrier generation and suppression of interfacial CT-state formation and question the applicability of the often used Braun-Onsager model to describe the bias dependence of the photocurrent in polymer:fullerene organic photovoltaic devices.