Vehicle finance discretionary commission complaints
The Financial Conduct Authority says some customers may have been charged too much on their vehicle finance before 2021.
Get support with commission complaintsVehicle finance discretionary commission complaints – information for partners
On 11 January 2024, the Financial Conduct Authority (FCA) announced that they’re going to undertake a review in the vehicle finance market.
The FCA’s review is due to the high number of customer complaints about discretionary commission arrangements, which the FCA banned in January 2021. This work is market-wide and affects all providers of vehicle finance.
The information below will give you more information and help you decide what you should do if you’re contacted by a customer, the Financial Conduct Authority (FCA), the Financial Ombudsman Service (FOS) or a Claims Management Company (CMC).
Frequently asked questions
Discretionary commission arrangements
Did my customer’s agreement have a discretionary commission arrangement?
If your customer’s agreement was taken out before 28 January 2021, there may have been a discretionary commission arrangement in place.
The customer took out finance on their vehicle after 28 January 2021, can they make a complaint?
Yes. But this will not be related to discretionary commission arrangements.
On 28 January 2021, the FCA banned all discretionary commission arrangements. As a result, the FCA are undertaking a review of agreements that started before 28 January 2021, and where there was a discretionary commission arrangement in place with the intermediary selling the vehicle.
Scope of the FCA commission review
Does the review only cover cars?
We provide finance for cars, vans, motorcycles and leisure vehicles (like motorhomes). Our current understanding is all these types of vehicles are covered by the review.
Does this apply to just new vehicles, or used as well?
Both new and used vehicles which were financed.
Is the FCA’s review only looking at Personal Contract Purchase (PCP) agreements?
Our current understanding is no. The FCA’s review covers Hire Purchase, PCP and Conditional Sale.
Does this apply to businesses who took out finance on a vehicle, or is it only consumers?
Our current understanding is it’s regulated finance agreements only, but we can confirm when we receive the outcome of the review.
Does the review apply to customers in Northern Ireland?
Customers in Northern Ireland are treated in exactly the same way as customers in England, Scotland and Wales, which means the announcement does apply to them.
Does the review apply to customers in Ireland/Republic of Ireland?
No. There is a different regulator with separate regulations in Ireland and that means they are not impacted by this announcement.
Should I be preserving customer information and documents?
On 11 January 2024, the FCA introduced a record retention rule in their handbook (DISP 5.3) in relation to DCAs. Lenders and credit brokers (such as dealers and brokers), must retain and preserve the following (whether in paper or electronic format):
- Regulated credit agreements
- Records of the commission arrangements relating to the regulated credit agreements
- Records of any commission, fee or other financial consideration paid (directly or indirectly) in connection with the regulated credit agreement, including details of its structure and calculation;
- Communications with the customer (pre and post contract) which could include amongst other things, explanation documents provided to customers, letters, leaflets, during the course of their purchase of a vehicle using DCA finance
Until further notice, please do not delete, or dispose of documents, relating to DCAs for the period 2007 to 2021.
You can find more information about how you should process customer data in our Dealer and Broker Conduct Guide, which can be found here
Contact from a third party
I’ve been contacted by the Financial Ombudsmen Service (FOS) for information about a customer claim, what should I do?
If you’re contacted by the FOS, for example to complete a Motor finance commission: Business response form, it’s likely that one of your customers has complained to the FOS about a discretionary commission arrangement. You should respond with the information requested at your earliest convenience, and within any timescales the FOS sets out.
I’ve been contacted by a claims management company (CMC) for information about a customer claim, what should I do?
If you receive a ‘letter before action’ from a CMC, it’s important you do not ignore this communication. If you need support, we recommend you seek your own legal advice. We would also be grateful if you could forward us a copy of the letter before action for our records.
Vehicle finance commission complaints review process
Will my customer be entitled to compensation?
At this stage, we can’t comment on if there is likely to be any potential remediation. What we do know is on 11 January 2024, the FCA announced that they’re going to undertake review work in the motor finance market and the FCA is currently anticipating announcing next steps on or before, 24 September 2024.
This is due to the high number of complaints coming from customers regarding discretionary commission arrangements (DCAs) which existed prior to changes introduced by the FCA in 2021.
This work is market-wide and affects all providers of vehicle finance.
You can find out more about the FCA’s work on their website, which is https://www.fca.org.uk/.
One of my customers wants to register a complaint with you, what should they do?
Please ask them to follow the information on this page to find out more and register a complaint.
I’ve been contacted by a customer who doesn’t know if they had an agreement with you, and I’ve got no details, what should they do?
To help us find out if they had an agreement with us, they can log an information request. This will enable us to investigate whether we have any records for them. Once an information request has been made (and we have confirmed whether the customer had an agreement with us), they may wish to visit our website and log a discretionary commission complaint. Please ask them to visit this page for more information.
If a customer logs a discretionary commission complaint, when will they get a final decision from you?
Normally, we must provide a response within 8 weeks, or let the customer know that we need longer.
While they carry out their review, the FCA have put in place a pause in responding to customer complaints about discretionary commissions arrangements.
The pause will last, at least, until the 25 September 2024, and will ensure complaints are dealt with fairly by all vehicle finance lenders.
The outcome of the FCA’s review will decide if we need to take any action on these complaints, such as customer compensation.
This pause is limited to only discretionary commission arrangement complaints. There are no changes to the timescales in place for all other complaints.
Does this impact how you are managing and processing complaints not related to discretionary commissions arrangements?
No. There are no changes to how and when we must respond to all other types of complaints. The changes only relate to discretionary commission arrangement complaints.
Free and independent advice
FCA commission review
Information on the FCA’s review of discretionary commission arrangements and the temporary measures they’ve put in place.
Financial Ombudsman Service (FOS)
Summary of criteria for customers making a complaint about commission paid to dealers, and the additional support they provide.
Information for firms on motor finance complaints
Click below to find information for firms affected by the FCA’s review into the historical use of discretionary commission arrangements (DCAs)
Discretionary commission arrangement support for customers
Customers can find out more information, and decide whether to raise a complaint with us if they think they’ve been affected.