We see a range of complaints about car finance agreements, covering things like the sale of the finance, the affordability of the loan, or charges applied. Our page on car finance covers the range of complaints we see.
This page contains information for businesses and focuses on complaints about commission paid by a lender to a car dealer (acting as a credit broker) when arranging a car finance agreement.
You can also find out more about the temporary complaint-handling rules introduced by the Financial Conduct Authority (FCA) on 11 January 2024 relating to certain car finance complaints where a discretionary commission arrangement was in place.
Types of complaint we see
We see complaints about car finance commission that’s paid by lenders to car dealers (acting as credit brokers) on a range of car finance agreements and different commission models.
Customers contact us because they believe:
- the way their car finance agreement was arranged was unfair, or
- the commission wasn’t properly disclosed and had an impact on how much interest they paid or the type of loan they received.
They haven’t been able to resolve the complaint with the financial business, and so they come to us to investigate what’s happened.
When they contact us, people tell us that:
- they weren’t told the credit broker or intermediary – usually a car dealership – would receive commission from the lender for arranging the finance
- they think the commission model used by the lender was unfair
- the advice the credit broker gave them wasn’t impartial because of the commission arrangements between the broker and the lender
- the credit broker didn’t give the consumer the best interest rate available
Handling a complaint like this
If you don’t reply within the time limits, or the customer disagrees with your response, they can bring their complaint to us. We’ll check it’s something we can deal with, and if it is, we’ll investigate.
FCA’s temporary complaint-handling rules to certain car finance complaints
On 11 January 2024 the financial services regulator, the FCA, announced it would be assessing the car finance market to make sure that if consumers suffered a loss due to poor practices, they are compensated fairly.
While the FCA conducts its review, it has introduced temporary complaint-handling rules to certain car finance complaints where a discretionary commission arrangement was in place.
The FCA’s rules allow:
- businesses to have more time to respond to complaints. Businesses usually have up to 8 weeks to send their final response to complaints, but the FCA has extended this by 37 weeks (so a business may have up to 45 weeks in total).
- consumers to have more time to bring their complaint to us. Usually, consumers will have 6 months from the date on the final response to refer the complaint to us, but the FCA has extended this to 15 months for certain complaints.
The FCA's rules will apply to complaints where:
- a consumer bought a motor vehicle on finance, for example car, van campervan or motorbike, before 28 January 2021 (this includes hire purchase agreements such as Personal Contract Purchases)
- the lender and car dealer (acting as credit broker) had a discretionary commission arrangement, and
- the consumer:
- made a complaint to the car dealer (acting as credit broker) or lender between 17 November 2023 and 25 September 2024, or
- received a final response to their complaint from the business between 12 July 2023 and 20 November 2024.
The rules won’t apply to complaints if any of the following apply:
- the consumer bought a car using car finance on or after 28 January 2021
- the car was purchased under a hire agreement, such as Personal Contract Hire
- another commission model was in use such as flat fee or fixed rate commission model
If a consumer brings their complaint to us and you haven’t made it clear whether the FCA temporary complaint-handling rules apply, we will ask you to. If you don’t respond promptly, we may begin investigating the complaint and a case fee will be charged. It is important you communicate quickly and clearly to the consumer and us.
You can find more information about the temporary complaint-handling rules on the FCA’s website.
Complaints about car finance that are not related to commission
If the complaint is about another issue that doesn’t cover commission but is eligible for extra time under the FCA temporary complaint-handling rules (because a discretionary commission arrangement was in place), we would still encourage you to send your final response as soon as you can. This is so consumers are not waiting longer than necessary to get a resolution to their complaint.
If the consumer is complaining about another issue where the FCA temporary complaint-handing rules don’t apply, you should continue to investigate the complaint as normal.
Information we will ask for when we receive a complaint
Once a complaint has been referred to us and we’ve decided it is something we can investigate, we will ask you to provide information about your side of events.
For a complaint about car finance commission, we would typically want you to provide the following:
- Evidence of the amount of commission that was paid by the lender to the car dealer (acting as credit broker) and what commission structure/arrangement was in place. If there were multiple commission payments (or commission models), we will need details of each of these. Supporting evidence could include:
- the commission contract documentation between the lender and the broker, and
- system screenshots.
- Where the commission structure/arrangement was variable in some way, details of how it was variable including providing evidence of the full range of commission payments and interest rates that were available.
- Documentation or other evidence showing what was explained to the consumer about the commission arrangement at the time they took out the finance agreement. This might be:
- the initial disclosure document (IDD) (or status disclosure document)
- a demands and needs questionnaire or suitability report
- the finance agreement and any pre-contract documents
- Details of what work was carried out by the broker in arranging the finance agreement and how this related to the commission that was paid.
What we look at
As with every case, in reaching a decision about what’s fair and reasonable, we consider relevant:
- law and regulations
- regulators’ rules, guidance and standards
- codes of practice
- what we consider good industry practice at the relevant time
If there are disagreements about the facts, we’ll make our decision about what probably happened using evidence provided by you, your customer and relevant third parties.
Complaints relating to car finance where a discretionary commission arrangement was in place
We’ll expect you to be able to show us that you’ve investigated the complaint thoroughly. This includes providing meaningful responses to consumers, and where appropriate, being clear about the type of commission arrangements that were in place (including whether there was a discretionary commission arrangement) and how much commission was paid.
Any complaints that are with us (or complaints referred to us after you have sent your final response) we will continue to progress as normal. We will expect you to cooperate with our investigations in line with the FCA’s complaint-handling rules.
Putting things right
If we think you have made a mistake or treated a consumer unfairly, we’ll ask you to put things right. Our general approach is that the customer should be put back in the position they would have been in if the problem hadn't happened.
The exact details of how we’ll ask you to put things right will depend on the complaint, and how the customer lost out. In some cases, we may also ask you to compensate the customer for any distress or inconvenience they’ve experienced as a result of the problem.
Business Support Hub
If you want to talk informally about a complaint you’ve received, you can speak to our Business Support Hub. They give general information on how the Financial Ombudsman might look at a particular complaint. They also offer guidance on our rules and how we work.
Find out how to contact our Business Support Hub.