If you bought a car using finance, some consumers may be eligible to make a complaint or seek compensation, depending on the circumstances of their finance agreement.
Millions of people in the UK took out car finance agreements without knowing that some lenders paid discretionary commission bonuses to dealers. These payments could have encouraged dealers to charge higher interest rates, meaning customers paid more than they should have.
Recent attention on the issue has led many drivers to check whether they could have a claim. In fact, some estimates suggest the average compensation payout could be around £829, although the amount varies depending on the agreement and individual circumstances.
Understanding Mis-Sold Car Finance
Between 6 April 2007 and 1 November 2024, many car finance agreements from the likes of BMW, Audi, Stella, Close Brothers and Blackhorse may have included commission arrangements that customers were not told about (Source: Claim Smart). One of the main concerns is the use of discretionary commission models, where a dealer could increase the interest rate and receive a larger commission as a result.
This has affected both new and used cars, so it does not matter whether you bought a brand-new vehicle or a second-hand one. If you used finance during the qualifying period, it is worth checking if your agreement could be eligible.
The scale of the issue is significant. It is estimated that millions of UK motorists could have been affected by these commission arrangements. With such a large number of potential claims, many people are now looking at the different ways they can make a complaint.
The issue has been the subject of significant regulatory and legal scrutiny in the UK. The Financial Conduct Authority (FCA) has introduced measures relating to complaints about discretionary commission arrangements in motor finance, while the Financial Ombudsman Service (FOS) continues to assess complaints based on the individual facts of each case. In addition, legal developments, including proceedings before the UK Supreme Court, have helped shape the broader discussion around lender responsibilities and consumer rights. Research published by the House of Commons Library also highlights the scale of the issue and the evolving regulatory framework surrounding motor finance commission arrangements.
Making a Car Finance Complaint Yourself
One option is to make the complaint yourself, and this is completely free. You can contact the finance provider directly and ask them to review your agreement.
You may need to provide details such as your finance account number, vehicle registration, or any paperwork you still have. The Financial Conduct Authority (FCA) has introduced measures relating to complaints about discretionary commission arrangements, while the Financial Ombudsman Service (FOS) continues to consider complaints on their individual merits. Consumers should follow the latest guidance issued by the relevant authorities when making a complaint. Whilst many are reluctant to do so, it highlights that successful claims can be made going directly.
Even if you no longer own the vehicle, you can still complain about finance agreements taken out between 6 April 2007 and 1 November 2024. This includes vehicles you have owned in the past, whether they were purchased first-hand or second-hand.
If someone who has passed away had a qualifying finance agreement, it may also be possible for their estate or an authorised representative to make a complaint on their behalf, depending on the circumstances and the finance provider's requirements.
Making the complaint yourself can save you money, but you may need to spend time gathering documents, contacting lenders and following up if further information is requested.
You Can Use a Claims Management Company - But Always Check Terms
Another option is to use a claims management company. Claims management companies may assist consumers with preparing and submitting complaints, although the services offered and associated fees vary. They may also keep track of the progress of your complaint and deal with any requests for additional documents.
For some people, this support can make the process feel simpler, especially if they have had several finance agreements over the years or no longer have all their paperwork.
However, claims management companies usually charge a fee if your claim is successful. This is often a percentage of your compensation, such as 20% or 30%, although the exact amount varies between companies.
Before signing up, it is important to read the terms and conditions carefully so you understand what you will pay and how the fee is calculated.
Which Reclamation Option Is Right for You?
If you are happy to manage the paperwork and contact the lender yourself, making a complaint directly is free and could help you keep all of your compensation if your claim succeeds.
If you would rather have support throughout the process, a claims management company may be a suitable option, provided you are comfortable with the fees involved.
Whichever route you choose, it is worth checking every finance agreement you have had during the qualifying period. Many people have financed more than one vehicle over the years and may have more than one potential claim.
Final Thoughts
Car finance complaints have become one of the biggest consumer issues in the UK in recent years. If you took out car finance between 6 April 2007 and 1 November 2024, it is worth finding out whether you were affected by undisclosed discretionary commission arrangements.
With estimated average compensation of around £829 for eligible claims, checking your agreements could prove worthwhile. Whether you decide to make a complaint yourself for free or use a claims management company for additional support, understanding your options is the first step towards finding out if you are owed compensation.
