Some car finance customers may have been charged too much on their loans. Find out what to do if you think this affects you.
Update: 13 November 2024
We've announced that we'll consult on extending the time firms have to respond to complaints about car finance where any type of commission was involved. We expect to publish proposals within 2 weeks and, if taken forward, it would mean the complaint extension is in place by mid-December 2024.
Currently, car finance firms have longer to respond to complaints only where discretionary commission arrangements (DCAs) are involved.
On 25 October 2024, the Court of Appeal issued a judgment on 3 car finance claims. The court decided it was unlawful for the brokers (car dealers) to receive a commission from the lender without getting the customer’s informed consent to the payment. This includes being told all relevant facts, including the amount of the commission and how it would be calculated. The decision affects car finance lending involving any type of commission, not just DCAs, which this page focuses on.
Car finance firms are likely to receive a high volume of complaints in response to the Court of Appeal’s judgment. A complaint extension to cover any car finance commission arrangements would allow them time to consider how these might be efficiently and effectively handled.
We're also planning to consult on giving consumers more time to refer these types of complaint to the Financial Ombudsman Service. We're consulting so everyone has a chance to have their say before we make a final decision.
Making a complaint
If you think you have cause to complain about commission in a car finance deal not involving a DCA, find out how.
If you think your loan may have included a DCA, read this page for more information.
We’re investigating whether some car finance customers were charged too much on their loans. If you’re owed compensation, we want to make sure you get it in the best way possible.
We’re planning to announce the findings of our investigation and next steps in May 2025. This will give us the time needed to assess whether we should allow firms to handle complaints in the usual way or introduce a different approach.
While we’re investigating, we’ve also extended the deadline that providers (lenders or brokers) have to respond to certain car finance complaints to after 4 December 2025.
But if you used car finance to buy a vehicle before 28 January 2021, you should check if our work applies to you, and find out how to complain.
Read more about why we’ve extended the deadline.
If you’d like to receive updates on our work involving car finance complaints and what it means for you, sign up for email updates.
Discretionary commission arrangements
Before January 2021, some lenders allowed brokers (the person that arranges your loan, for example, your car dealer) to adjust the interest rates they offered customers for car finance.
The higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement (DCA). And it may have been applied to your loan without you knowing.
DCAs created an incentive for brokers to increase how much people were charged for their car loan. We banned this practice in 2021. But there have since been a high number of complaints from customers about how much they were charged before the ban. Providers are rejecting most of these complaints, because they believe they haven’t acted unfairly and haven’t caused customers to lose out.
We’re reviewing the issue to make sure that, if you're owed compensation, you get it in the best way possible.
It’s important that any complaints are dealt with in a consistent, efficient and orderly way. Given the high number of possible complaints, there’s a risk this might not happen.
Managing this risk is important because this borrowing isn’t covered by the Financial Services Compensation Scheme (FSCS). This means if complaints aren't dealt with in an orderly way, and your provider goes out of business, you may not get the money you’re owed.
Who this applies to
This applies to you if:
- you used car finance to buy a motor vehicle, for example a car, van, campervan or motorbike, before 28 January 2021 (this includes hire purchase agreements, such as Personal Contract Purchases), and
- your lender and broker used a DCA
You can check with your provider if they used a DCA.
If you’re not sure who your provider was, but the agreement was active in the last 6 years, you can try checking your credit file as your provider may be listed on there. Find out how to access your credit file for free from the Information Commissioner’s Office.
This doesn’t apply to you if:
- you used car finance to buy a car on or after 28 January 2021, or
- you used a hire agreement, such as a Personal Contract Hire
- your provider tells you they didn’t use a DCA on your car finance
If this doesn’t apply to you, but you have a complaint about another issue, find out how to complain.
How to make a complaint
Find out what your next steps should be if you think you could be owed compensation.
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1
Check if you're eligible to complain
Get in touch with your provider (either your lender or broker) and find out if they used a DCA. If they didn’t use a DCA, you shouldn’t pursue a claim for this type of complaint.
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2
Complain to your provider
Contact your provider. Tell them why you’re making a complaint about a DCA on your car finance agreement. Make a record of how and when you got in touch.
You can complain to either your lender (the firm providing the finance) or your broker (for example, your car dealer).
Generally, you need to complain to your provider within 6 years of the problem happening. Or, if later, within 3 years from when you should have become aware that you had cause to complain.
If your lender or broker is in administration or winding up its business, you can complain to the administrator or liquidator. You’ll be able to find their contact details on the Financial Services Register, or by checking your provider’s website.
But if both your lender and broker have gone out of business, you won’t be able to make a complaint. You also won’t be protected by the Financial Services Compensation Scheme (FSCS), so you won’t be able to make a claim.
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3
Getting a response from your provider
Once you've made a complaint, your provider should send you an acknowledgement.
Under our new rules, your provider won’t have to give you a final response to your complaint until after 4 December 2025.
If you’re unhappy with their response, you can then complain to the Financial Ombudsman Service.
Taking your complaint to the Financial Ombudsman
It’s important you contact the Financial Ombudsman by the date given in your provider's final response letter, or they may not be able to help.
- If you’re sent a final response between 12 July 2023 and 29 April 2025, you’ll now have until 29 July 2026 to take your complaint to the Financial Ombudsman.
- If you’re sent a final response between 30 April 2025 and 29 January 2026 you’ll have 15 months from the date the final response is sent to refer your complaint to the Financial Ombudsman.
Taking your complaint to court
Our work doesn’t stop you from taking a claim about your car finance to court.
But if you’re considering this option, you should think about getting independent legal advice.
If you’d like to receive an update on our work involving car finance complaints and what it means for you, sign up for email updates.
Help making a complaint
It’s free and simple to complain to your provider and then the Financial Ombudsman if you’re unhappy with a financial product or service. You don’t need to use a claims management company (CMC).
The Financial Ombudsman has information about car finance complaints, and if you’re concerned about the process, you can get free guidance from MoneyHelper.
A claims management company (CMC) can make a complaint for you, but you’ll have to pay a fee. If you're thinking about using a CMC, or another type of claims management service, find out what to expect.
If you’ve already made a complaint
Click the buttons below for step-by-step information on what to do once you've made a complaint.
Protect yourself from scams
Beware of scammers pretending to be from the FCA. We’d never ask you to transfer money to us and we’d never ask for your bank account PINs and passwords.
Find out about how to spot fake FCA communications, and some of the common tactics scammers use.
