Complaints about car finance commission

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 complaints about car finance covers the range of complaints we see.

This page focuses on how you can make a complaint if you are unhappy about commission paid by a finance provider to a car dealer when setting up your 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.  

When you buy a new or used car, you might use a car finance agreement to do so. With these types of finance agreements, you choose a car – usually at a car dealership – and the car dealership arranges a finance agreement between you and a finance provider. The finance provider may then pay commission to the car dealer.

The main types of commission model a car dealer or finance provider use are:

• Fixed rate – finance providers pay a fixed amount of commission to the car dealer, usually calculated as a percentage of the amount you borrow.
• Flat fee – a fixed amount of commission is paid by the finance provider to the car dealer for every finance agreement they process or arrange.
• Discretionary – the car dealer earned commission from the finance provider based on the interest rate a customer paid on their car finance, which the car dealer could set or adjust. Usually, the higher the interest rate, the higher the commission earned by the car dealer. The FCA banned discretionary commission arrangements in January 2021.

The car dealer or finance provider may use other types of commission model or use more than one model.

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 for certain car finance complaints where discretionary commission arrangements were in place.

Complaints affected by these rules

The FCA’s temporary rules will apply to your complaint if:

• you 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 finance provider and car dealer had a discretionary commission arrangement, and
• you:
  • made a complaint to the car dealer or finance provider between 17 November 2023 and 25 September 2024, or
  • received a final response to your complaint from the business between 12 July 2023 and 20 November 2024.

The FCA’s temporary rules won’t apply if any of the following apply:

• you 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

What this means for complaints

If your complaint is covered under the FCA’s temporary complaint-handling rules, the business must tell you. You can still complain to the finance provider or car dealer, but they won’t have to respond to your complaint until after 24 September 2024, at the earliest.

You will have more time to bring your complaint to us after making a complaint and receiving a final response letter from the business. Usually, you have 6 months from the date on the final response to refer your complaint to us, but the FCA has extended this to 15 months for certain complaints. There are also other time limits that apply when making a complaint to us.

Car dealers or finance providers will also have more time to respond to complaints. The 8-week timeframe for businesses to send a final response has been extended by an additional 37 weeks (so giving them up to 45 weeks in total). 

You can find out more about this on the FCA’s website. 

We see complaints about car finance commission that’s paid by finance providers to car dealers 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 car dealer would receive commission from the finance provider for arranging the finance 
• they think the commission model used by the finance provider was unfair 
• the advice the car dealer gave them wasn’t impartial because of the commission arrangements between them and the finance provider
• the car dealer didn’t give the consumer the best interest rate available 

Talk to your car dealer or finance provider and tell them you are unhappy and want to complain, so that they have the chance to look at what happened and put things right. They should reply with their final response within eight weeks or up to 45 weeks if your complaint is covered by the FCA’s temporary complaint-handling rules. If you’re unhappy with their response or they don’t respond at all within that time – let us know. 

Our service is free and easy to use. You don’t need to pay anyone to represent you, for example a lawyer or claims management company (CMC). But if you want to, you can ask a member of your family, a friend or someone else to help you with your complaint. 

When you contact us with your complaint, we’ll check your complaint is something we can deal with and, if it is, we’ll investigate.  

Find out more about how to complain.

The complaints we receive about car finance commission cover a variety of agreements and commission structures. They’re about finance providers, credit brokers – who is often also the car dealership – and other credit intermediaries. We look at all the information and evidence, before we reach an outcome in each complaint. 

To help us consider a complaint fairly, we’ll ask you to provide some information, tell us what you’re unhappy about and why you think you’ve lost out. We’ll make our decision about what happened using evidence provided by you, the financial business and any relevant third parties. 

It’s helpful if you give us all the evidence you have from the time you got the car and took out the car finance. It is helpful if you can provide things like: 

• the credit agreement itself – this is sometimes called a Hire Purchase (HP) agreement or personal contract purchase (PCP) agreement 
• Initial Disclosure Document (IDD) 
• any pre-contract information 
• adequate explanation documents 
• standard European consumer credit information 
• any other information provided to you by the car dealer 

But send us any of the information or paperwork you have from the time. Don’t worry if you no longer have some of these things – we can still likely look at your complaint. 

To reach a decision, we consider relevant:  

• law and regulations 
• regulators’ rules, guidance and standards 
• codes of practice 
• what we consider good industry practice at the relevant time 

We’ll think about whether the financial business did everything it was required to do, and if it didn’t, whether you’ve lost out as a result. 

If we decide you’ve been treated unfairly by the financial business, or that the business has made a mistake, we’ll ask them to put things right.

The exact details of how we’ll ask the business to put things right will depend on the nature of the complaint, and how you lost out. Our general approach is that you should be put back in the position you would have been in if the problem hadn’t happened.

If you’re a financial business looking for information to help you resolve complaints, read more on handling complaints about car finance commission.