Discretionary Commission Arrangements - Compaints and refunds
The Financial Conduct Authority (FCA) has taken decisive action against unfair practices in the UK car finance industry, specifically targeting the use of discretionary commission models. These models often resulted in consumers paying higher finance costs than necessary due to hidden commissions.
What is Discretionary Commission?
Discretionary commission allowed car dealers and brokers to adjust interest rates on car finance loans, directly influencing the commission they earned. The higher the interest rate, the more they profited – creating an incentive to overcharge customers.
The FCA Ban and Its Impact
Car Finance Companies Under Scrutiny: Who Could Owe You Money?
Several major car finance companies are facing scrutiny over their past use of discretionary commission. Martin Lewis, on his ITV Money Show, highlighted these firms that could potentially owe customers money due to hidden commission arrangements:
These companies were named as part of an investigation into mis-sold car finance, which could lead to a significant number of claims from customers who bought a car on finance before January 28, 2021.
In addition, three Lloyds businesses – Black Horse, Santander, and MotoNovo Finance – are facing allegations of overcharging on car finance loans between 2015 and 2021. These lenders are accused of adding almost £1 billion in excessive interest to customers' loans.
Think you might be affected? Contact us today for a free, no-obligation claim assessment.