MIS-SOLD CAR FINANCE COMPENSATION
NEW OR USED MOTOR FINANCE (HP OR PCP) 2008 - 2021
WHAT IS THE ISSUE?
"Discretionary Commission Arrangements" between the finance company and car dealership. This created an incentive for them to inflate the interest rate on your contract which fueled higher sales commissions. In short, you probably paid too much ! And can claim it back...
HOW DO I KNOW IF I'M ELIGIBLE TO CLAIM?
1. Were you informed of the final interest rate of your car loan, or if it was fixed or variable?
2. Were you informed if your contract contained a "Discretionary Commission Arrangement" which potentially increased your repayments?
3. Given bank rates were at an historic low over this period, was your contract interest rate 6% or above?
FREE CASE CHECK
Enter your details here, we will email you our Letter of Authority to enable us to contact your lender and find out if you are eligible to claim for compensation.
It's 100% FREE.
You do not need to use a CMC to make your claim. You can make your claim yourself to the company concerned or an industry regulator free of charge.
Interest rates have been at an historic all time low for some years now, yet dealerships and brokers have continued to charge 10%, 11% or more on car finance deals. Hidden commissions have pushed up repayments.
COMPLAINT
REJECTED
Have you already complained and had your claim rejected? Never fear!
The Financial Conduct Authority (FCA) is now undertaking an investigation amid concerns motor finance firms maybe unfairly rejecting mis-sold car finance claims from borrowers who believe their contract was more expensive because the dealer stood to earn a hefty commission by charging more.
Whilst this practice was banned in 2021 both the FOS and the FCA have heard from 1000's of people who believe they have been overcharged.
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GET THE FULL PICTURE
The Financial Conduct Authority is now conducting a full review of the vehicle finance market. The issue in question relates to discretionary commission arrangements across the motor finance market before the practice was banned in 2021.
The City regulator is reviewing whether people could be owed compensation for being charged too much for car loans, following a high number of complaints on historic agreements.
The Financial Conduct Authority (FCA) said it was a reaction to rising tensions between consumers and lenders over so-called discretionary commission arrangements across the motor finance market, a practice that was banned in 2021.
It has previously resolved complaints in favour of the consumer finding unfair arrangements between the lender and the motor dealer. The FCA banned incentives for brokers to increase the interest rate that the consumer pays for their motor finance in 2021 on the grounds that consumers could pay over the odds.
It said that motor finance firms had rejected most complaints relating to finance deals prior to the ban because they believed they had not acted unfairly nor caused the consumer loss due to the regulatory requirements at the time.
The FCA has now imposed a pause on motor firms providing final responses to consumer complaints whilst it undertakes further investigations. It has also extended the time a person has to complain from 6 months to 15 months, although like PPI the FCA can and will probably impose a "cut off" date much sooner than this.
WHEN YOU CAN CLAIM
The FCA's investigation will apply to complaints where you bought a car using car finance before 28 January 2021, which is when new rules banning this type of commission model took force. Your car finance was a personal contract purchase (PCP) the most common type of car finance or a hire purchase agreement, where you pay off the value of the car in monthly instalments. Your lender and car dealer (acting as a credit broker) had what's known as a 'discretionary commission arrangement' in place where the higher the interest rate you were charged, the more commission the broker would get.
WHEN YOU CANNOT CLAIM
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You bought your car using car finance on or after 28 January 2021, when such commission contracts were banned.
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You have a car leasing agreement (known as Personal Contract Hire).
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Your mis-selling claim doesn't centre around commissions. e.g.it could relate to affordability concerns where the dealership or finance company didn't check you could afford the loan.
These complaints can still be submitted, but we will deal with them under a separate handling process.
I THINK I HAVE BEEN MIS-SOLD MY CAR FINANCE SHOULD I CONTACT YOU NOW?
Yes, 100%. The FCA is investigating the issue right now and as with PPI it may put a claim deadline in place. Contact us now and we will ensure your claim is registered and handled on time.
I'VE ALREADY COMPLAINED BUT THE FIRM HASN'T RESPONDED YET
If you complained prior to 17 November 2023, your provider can still respond as normal. Though if you're unhappy with the response you got, you may want to take your complaint to the FOS. You do not need to use a CMC to do this and can do this yourself free of charge or you can let us handle it for you. Usually, you have to take your complaint to the FOS within six months of getting a final response from your provider. However, the FCA has extended this deadline for these claims to 15 months if you are sent a final response between 12 July 2023 and 20 November 2024.
MY CLAIM HAS ALREADY BEEN REJECTED BY THE MOTOR COMPANY CAN I RESUBMIT IT?
This depends on how far down the complaints process you are. If your complaint has just been dealt with by the firm involved, but has not gone to the FCA or FOS or gone to the courts, then contact us today and we will discuss your options with you. If your complaint has been dealt with by the FOS, then you won't be able to resubmit your complaint again. If your complaint has already been dealt with via the courts, the outcome of the FCA's investigation won't change that.
HOW MUCH COMPENSATION COULD I GET?
This all depends upon the outcome of the FCA's investigation. The pay out would be either the interest on loans (which is big), the commission (which is big), or the whole loan (which is huge). Possibly talking £1,000's for many consumers.
OUR ADVICE IS GET YOUR MIS-SOLD CAR FINANCE COMPLAINT IN NOW.
A FEW THINGS YOU
NEED TO KNOW.
REGISTER TODAY
Register your claim now. We will need your car registration, details of the dealership where you purchased your vehicle, date of purchase, cost of purchase, details of your vehicle loan and ideally a copy of the purchase and finance agreement although this is not mandatory as we may be able to obtain these from the dealership.
WHAT HAPPENS NEXT
We will review your details and assess the validity for a claim. Our experts will contact you about next steps. Nothing will happen without your knowledge and approval.
Please note we will act straight away, but claims may not be settled immediately due to the FCA's investigations and findings.
HOW DID THIS COME ABOUT
The practice of "Discretionary Commission Arrangements" was banned in 2021.
Many believe the car industry has been bending the rules for years.
From used car sales to loans and finances. The FCA is now ready to investigate car financing.
WHAT THEY DIDN'T TELL YOU
We all know car salesmen have a reputation, some deserved and some not so. But like all industry sectors they have "tricks of the trade" when it comes to marketing and selling their cars.
Discretionary Commission Arrangements in the UK motor finance industry refer to a specific commission structure where car dealers or brokers have the ability to determine the interest rate on a customer’s finance agreement. This means they can decide how much interest a customer is charged when paying off the loan on their new car.
Unlike with other loans, this rate is not static but varies based on several factors, mainly at the dealer’s discretion. The main principle behind this arrangement is the ‘discretion’ exercised by the dealer, which can influence the final cost to the consumer. What this means in practice, is that a dealer can increase the interest on a loan and pocket the difference as commission.
To understand how these arrangements work, consider a scenario where a customer wants to finance a vehicle. The lender provides a base interest rate, but the dealer, using the power of discretion, can increase this rate. For example, if the base rate is 4%, the dealer might raise it to 6%. This increase, while seemingly small, can lead to a big increase in the customer’s total repayment amount. The dealer’s commission is directly related to this rate increase, incentivising them to charge higher rates to customers without them knowing.
The controversy surrounding Discretionary Commission Arrangements stems from their potential to create conflicts of interest. Some argue that these arrangements incentivise dealers to prioritise their commissions over the financial wellbeing of their customers. This can lead to consumers being unknowingly charged higher interest rates, which raises concerns about transparency and fairness.
Additionally, these arrangements can disproportionately affect those who are less financially savvy, potentially leading to a situation where the most vulnerable customers end up paying the most. Those that are more financially literate may know what unusually high interest rates look like, whereas others may not. The Financial Conduct Authority (FCA) in the UK has raised concerns over the ethical nature of these arrangements, leading to calls for more transparent lending practices.