How to complain about a commission arrangement on a car finance loan
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The Financial Conduct Authority (FCA) announced that around 12.1 million car finance agreements will be due compensation as they failed to disclose certain information.
This primarily affects finance agreements that included a discretionary commission arrangement (DCA), which allowed brokers to adjust interest rates offered to the customer. In some cases, the higher the interest rate, the more commission the broker received. The practice of DCAs was banned in 2021.
The FCA has also said that compensation may be due if you were not told about a high commission arrangement (35% of the total cost of credit and 10% of the loan), or if there was a contractual arrangement or tie between the lender and broker which provided exclusive rights to lenders to provide credit.
Need to know
You do not need to use a claims management company or law firm to make a complaint. It is free to complain, and the FCA has committed to an 'easy to participate in' redress scheme.
A claims management company or law firm may charge you and could take as much as 30% of any compensation payout.
If you do not know who your agreement was with, you can search an old bank statement, contact the dealership you purchased your vehicle through or search your credit file for information. The FCA has a full list of lenders.
Am I eligible?
The compensation scheme will cover motor finance agreements taken out between 6 April 2007 and 1 November 2024.
If you used finance to buy a vehicle before 28 January 2021, then it's likely there was a commission arrangement on your deal.
You may be eligible for compensation if you were not told about commission payments on your finance agreement.
You're most likely to be affected by this if:
- you used car finance to buy a car before 28 January 2021. This includes conditional sale agreements and fixed-sum loan agreements (including hire purchase and personal contract purchase, but not personal contract hire).
- your lender and broker used a discretionary commission arrangement.
This doesn’t apply to:
- Car finance arrangements made on or after 28 January 2021.
- Hire agreements, such as personal contract hire.
Scam warning
Which? is aware of scammers claiming to offer car finance claims services. Some are impersonating authorised firms and the FCA.
Scammers are using adverts on social media and search engines to target people.
What is the process?
For loans taken out before 1 April 2014, the compensation scheme will start on 31 August 2026.
For loans taken out after 1 April 2014, the compensation scheme will start on 30 June 2026.
The FCA advises that you should make a formal complaint to your finance provider if you think you may be affected. If you have already complained, you do not need to do anything. The FCA says that you should hear back from your lender by 30 September 2026. If you accept their offer, they will pay you within one month. If you are not happy with the offer, you can make a complaint to the Financial Ombudsman.
If you have not complained, the FCA advises that you will be contacted by the lender within six months of the scheme starting. You will be asked if you would like your case reviewed and you will have six months to decide. Once you have responded to the lender, you will be told how much you are owed within three months. If you accept the offer, the lender will have one month to pay you.
If you don't receive a letter - perhaps because your address has changed and the lender doesn't have your details - you will have a year to claim once the scheme has started.
The FCA has said that the average payout will be £700 and the first payments will be made in early 2026.
- Find out more: everything you need to know about car finance mis-selling
How to complain
To make a complaint, you will need to find out who your arrangement was with. You can do this by:
- Checking an old bank statement
- Contacting the dealership you purchased the car from
- Checking your credit file for details
- Search the FCA list of lenders.
Once you have their contact details, write to them to ask if your finance agreement included:
- A discretionary commission arrangement
- A high commission (equal or greater than 35% of the total cost of credit and 10% of the loan)
- Or, a contractual tie between the lender and broker.
You can use our free template letter to complain about a discretionary arrangement. You may not know whether there was a DCA in relation to your finance agreement, so our template letter asks this question first.
The letter asks the recipient to treat your request for information as a subject access request (SAR) if it can’t provide the information you are asking for. A SAR is a written or verbal request to a company or organisation asking for access to the personal information it holds on you. It is usually a free service, but occasionally a company may charge a small fee for processing and sending the information. We can’t guarantee that this approach will achieve the desired result, but we think it’s worth a try.
If you send the letter via post, make sure to keep a copy of your letter and use a service that gives you proof of delivery.
If you send it via email and don’t receive an acknowledgement, make sure you follow up with the firm to ensure they received it.