MOTOR FINANCE CLAIMS IN THE UK: WHAT HAS HAPPENED AND WHAT COMES NEXT
Nobody in the UK will have missed the proliferation of adverts across all forms of media encouraging customers who paid for cars under a motor finance contract to bring claims against their lenders for undisclosed commission arrangements.
This article looks at the background to the motor finance undisclosed commission claims landscape, where things currently stand and what may happen next.
Background
Between April 2007 and October 2024, approximately 32.5million regulated motor finance agreements were signed allowing customers to acquire the use of cars ‘on finance’. The Financial Conduct Authority (FCA) estimates that more than three-quarters of these agreements involved a commission payment from the lender to the broker, usually a car dealer, who arranged the credit.
In April 2017, the FCA announced a review of the motor finance sector. The review assessed sales processes and the potential for conflicts of interest to arise from commissions paid by lenders to brokers.
In March 2019, the FCA published a report which identified concerns over the widespread use of discretionary commission arrangements (DCAs). The DCAs allowed brokers to adjust the interest rates on loans offered to customers which would affect the level of commission that the broker earned.
The FCA was concerned that DCAs gave an incentive to car dealers to offer higher interest rates. The FCA banned the use of DCAs in the motor finance sector from January 2021, estimating that this would save motor finance customers around £165m a year. However, the FCA did not suggest that there had been widespread harm sufficient to justify an FCA-led customer redress scheme or other regulatory intervention at that stage.
Jan-Mar 2026 issue
CMS Cameron McKenna Nabarro Olswang LLP