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Cars for Sale

If you purchased a new or used car using dealer finance between 2008 and 2021, UNDISCLOSED commissions mean you could be entitled to significant compensation.

mis-sold car finance
mis-sold car finance

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You do not need to use a CMC to make your claim. You can make your claim yourself and approach any regulatory body free of charge

WHAT'S THE ISSUE?

Between 2008 and 2021 car dealerships and the finance companies they used to finance vehicle sales used something called "Discretionary Commission Arrangements" which allowed the dealer to set the interest rate on vehicle financing.

During this period the Bank of England base rate was at an historic all time low ranging from 0.25% to 0.75%. However, some car finance agreements were set a lot higher leading to speculation of unfair practises driven by high sales commissions.

Some car finance agreements we have had access to are showing interest rates of 10%, 15%, 20% and as high as 29%. 

MOODY'S RATING AGENCY SUGGEST COMPENSATION PAYOUTS COULD BE £30BN.**

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mis-sold car finance
mis-sold car finance

WHO TO LOOK OUT FOR 

There is no one finance company involved in the mis-sold car finance scandal. However, those we have come across and are worth looking out for are listed below. Keep in mind these are the finance lenders and not the car dealerships. ​​

mis-sold car finance

Barclays Partner Finance

BMW Financial Services

Alphera

Blackhorse

Santander Consumer Finance

Mercedes Financial Services

MotoNovo

If you do not know the name of the company that financed your vehicle, do not worry. We can usually get that from your car dealership.

CLAIM REJECTED?

We are coming across a number of clients whose claims have already been rejected either by their car dealership or the finance company who financed their vehicle sale. 

Most of these were in the early stages of the mis-sold car finance scandal and long before the Courts got involved.

In late 2024 The High Court reviewed 3 previous mis-sold car finance cases and not only deemed they were potentially in violation of consumer rights, but widened the scope of the definition of claims from the original Discretionary Commission Arragements to ALL PCP/HP/LEASE type financing. In short, ANY undisclosed sales commissions could now fall under the scope of mis-selling. 

If you previously made a claim and it was rejected by your car dealership or their finance company, get in contact with us today and we will let you know if you have a right to re-submit your claim. 

BE IN THE KNOW

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

  • You bought your car using car finance on or after 28 January 2021, when such commission contracts were banned. 

  • You have a car leasing agreement (known as Personal Contract Hire).

  • 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.

WHY USE CLAIMLINE?

There are a number of very good reasons you should choose Claimline Legal UK to handle your mis-sold car finance claim

mis-sold car finance

Firstly, we have over 14 years experience in successful financial claims managment. We are not simply here on the "band-wagon".

Claimline Legal UK is also independently owned. The same owner has been managing and growing the company over all this time, ensuring our focus has always been customer driven.

Claimline Legal UK is UK owned and UK based. You will never be handed to an overseas call centre. 

You as a valued customer, will always have direct email access to your claim handler who will treat you with respect and provide you with the most up-to-date support.

OUR FEES ARE FIXED AND CAPPED IN AN EASY TO UNDERSTAND FEE STRUCTURE TABLE. THERE ARE NO SURPRISES. 

MORE INFORMATION

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.

  • mis-sold car finance
  • mis-sold car finance

© 2025. Claimline Legal UK Ltd.  All Rights Reserved. Claimline Legal UK Ltd is Authorised and Regulated by the Financial Conduct Authority in respect of regulated claims management activities FRN:838320. Our registration can be found here. Registered with the Information Commissioners Office Z2331844. Office admin address 137-139 High Street, Beckenham, Kent, BR3 1AG. Registered address 17 Beckenham Grove, Bromley, Kent, BR2 0JN. Registered as a company in England & Wales. Company Registration No 7334817. VAT Number 133 9993 75. *The term "no-win no-fee" is used within the terms outlined in point 6 of our Terms & Conditions. Cancellation and other fees may apply. Pictures on this site are for representation only and may not represent actual employees or locations. You do not need to use us or anyone else to make your complaint or claim. You can do this yourself for free. If your claim is not successful you can also refer it to the Financial Ombudsman again for free. However you choose to make your claim please note the FCA is currently reviewing mis-sold car finance claims and lenders do not have to make any compensation payments until the FCA has completed its review. Payments, if any, from lenders should start several weeks after that. All timelines are subject to the FCA's review process.**The Times 19/11/2024. Powered by Pozitive Media

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