UPDATE – 13 November 2014
In late October, an Appeal Court judgment said commission should be refunded in a much broader range of cases, not just discretionary motor finance. The FCA is now proposing to extend the pause on discretionary commission complaints to cover fixed commissions as well. See Car commission refunds – can more people get refunds? where I cover this in detail
UPDATE – 24 September 2024
Following a consultation in August, the FCA announced an extension to the timetable for car finance discretionary commission complaints:
- the FCA had originally intended to publish its review setting out next steps in September 2024. This has now been postponed until May 2025, because there is a challenge to the Ombudsman’s decisions on these cases. The Judicial Review of the Ombudsman decision is bein heard in October 2024 and the FCA hopes for a judgment by the end of 2024;
- this FCA review is likely to lead to new rules which the FCA will consult on. It will have finalised these by December 2025;
- finance lenders will then have to follow the new approach;
- because of these delays, consumers are who have made a complaint and received a Final Response from the car finance lender now have longer to take their case to the Ombudsman The FCA says “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.”
UPDATE May 2024
See Car finance discretionary commission claims – update May 2024 which has a round up of recent news about these commission claims and looks at what, if anything, you should do now.
On 11 January 2024, the Financial Ombudsman (FOS) published several decisions about discretionary car finance commission, including one against Black Horse and one against Barclays Partner Finance.
In these cases, people were charged a higher interest rate to increase the commission the dealers got. And FOS ordered a refund.
This is a scandal that may have affected millions.
These FOS decisions open the way to a large number of claims for refunds from people who took out car finance before 28 January 2021. Martin Lewis says this may be “the new PPI”.
As a result, the Financial Conduct Authority (FCA) which regulates car finance lenders has taken the highly unusual step of pausing complaints about these commissions. It says:
It’s important that any complaints are dealt with by providers in a consistent, efficient and orderly way. Given the high number of possible complaints, there’s a risk this might not happen.
The FCA is now giving car finance companies longer to respond to complaints and allowing you longer to take your complaint to the Ombudsman.
Contents
Why refunds are being given
Discretionary commissions were unfair
Before 28 January 2021, it was common for some car finance lenders to allow a car dealer or broker to set the interest rate on a car finance agreement within a range. In this article, I just refer to the car dealer, not a broker, for short.
The dealer would get more commission from the car finance lender the higher the interest rate was. So they had an incentive to set your rate as high as they thought you might accept.
As the dealer chose the rate, this is called “discretionary commission”. This was not explained to the customers, so the commission is also called “undisclosed” or, in layman’s terms, “secret”.
These discretionary commissions were charged on a lot of car finance for both new and used cars. On 28 January 2021, the FCA banned this in car finance. So it isn’t a problem on recent contracts.
If you took out car finance before January 2021, you may have paid a higher interest rate than you should have.
This was unfair as:
- you were not told about it;
- if you had known, you may have negotiated to reduce it or looked to see if you could get finance at a lower rate;
- the dealer didn’t do any extra work to justify paying extra commission.
A typical Ombudsman refund decision
FOS issues key decisions when it wants them to be seen as typical of decisions the Ombudsman may take in similar cases.
This is what happened in the Black Horse case:
- the Ombudsman found that Black Horse was prepared to lend to Mrs Y at any flat interest rate between 2.49% and 5.5%, with any amount over 2.49% going to the dealer as commission;
- the broker had discretion over what rate to charge. It set the rate for Mrs Y at 5.5% – the highest it could. This got the dealer the most commission;
- the extra discretionary commission accounted for more than half of the interest that Mrs Y would have to pay;
- Mrs Y was not told how large this commission was, nor that the dealer had set the interest rate and the commission;
- the Ombudsman found that this was unfair.
To put this unfairness right, the Ombudsman ordered that:
- Mrs Y should only have been charged the minimum interest rate of 2.49% and the extra commission amount she was charged should be refunded;
- 8% per annum statutory interest should be added to the refund.
The Barclays Partner Finance case was very similar. The broker had discretion over what rate to charge and setting a higher rate increased the broker commission. FOS took the same decision to uphold the case and ordered the lender to pay a refund that was calculated in the same way as in the Black Horse case.
In other cases, customers may get more or less, depending on the range of interest rates a dealer was allowed to set and which rate the dealer picked. If a dealer was allowed to set an interest rate between say 3% and 10%, and you win your claim you would be likely to get a higher refund if you were charged 8% than if you were charged 5%.
No discretionary commission – then no claim
In a third case, against BMW Financial Services, FOS found that the broker was paid a fixed commission by the lender. The customer who bought the car was not told how large the commission was, but the paperwork stated that the broker did receive a fee. Here FOS decided that the commission was not unfair, because it could not be increased by the broker, and the case was not upheld.
If no discretionary commission was charged on your finance, there is no claim for you to make.
Could this apply to your car finance?
Three things to check
Three things matter:
UPDATE none of these three things may matter after recent Appeal Court case
- the finance must have started before 28 January 2021 (After that date discretionary commission was banned.)
- the sort of car finance You can make a claim about Hire Purchase (HP) or Conditional Sale (CS) or Personal Contract Purchase (PCP)any of these types of car finance. (You can’t make a claim for Personal Contract Hire (PCH), sometimes called car leasing. And you can’t if you arranged the loan with a bank and it was not secured on your car.)
- whether you were charged discretionary commission There is a list of lenders who have stated they have never changed this sort of commission below – if your lender is one of these, there is no point in asking. But if your lender is not on that list, you have to ask to find this out. This is the key first step in making a claim, and it is easy – see below.
What doesn’t matter:
- if you are still paying the finance, you finished paying for it or you defaulted;
- if you still have the car, if it has been sold, or repossessed;
- how easy it was to pay the finance. That is irrelevant – this is a complaint that you were charged too much, not that it was unaffordable.
The Ombudsman can look at cases going back six years, or it can go back much further if you have complained within 3 years of finding out that there was a problem. And this is probably the first time you have heard about this! If your car finance is very old, there may be a problem if the lender has not kept any paperwork about it. But many very old PPI claims were won, so don’t let a worry about this stop you from making a claim.
Lenders who have never used discretionary commission arrangements
I cannot guarantee the accuracy of this list – it is for guidance. The following lenders have made a clear statement that they have never used discretionary commission:
A – Admiral; Advantage Finance; AutoLend; AutoMoney;
B – Billing; Burnley Savings & Loans
C – Car Loan Centre; Carmoola
F – First Response Finance
G – Guardian Finance
L – Lendable; Lombard
M – Mallard Finance; Moneybarn
O – Oodle; Oplo
P – Premium Plan
R – RateSetter; Retail Money Market
S – Specialist Motor Finance
T – Tandem
V – Vehicle Credit
1st Stop Finance.
The above list includes many “bad credit lenders” – if you had finance from one of them, then read the section at the bottom of this article on whether you can make an affordability complaint.
Lenders who have sometimes used discretionary commission arrangements
I cannot guarantee the accuracy of this list – it is for guidance.
This list is based on the original FOS decisions and the replies that some people have received in response to their query about discretionary commission. As more people leave comments here about their replies, this list will no doubt get much longer…
B – Barclays Partner Finance; Black Horse; Blue Motor Finance, BMW
C – CA Auto finance; Close Brothers
H – Honda; Hitachi Capital
F – Ford
M – Marsh Finance; Mobilize, Moneyway; Motonovo
S – Santander; Startline; Stellantis
V – Vantage; VWFS.
If your finance was through one of these firms you still need to ask if there was any discretionary finance on your contract. Just because a lender sometimes used it doesn’t mean they always did.
How to make a claim
Make an initial enquiry
Originally I had a template here. Now I suggest you use the MSE free tool. This will be updated for the recent Appeal Court ruling
There may be a delay before you get a reply
Normally a firm should respond within 8 weeks or you could send it to the Ombudsman.
But the FCA says:
We’re assessing the extent of the problem to make sure that, if you are owed compensation, you get it in the best way possible.
And as part of this, the FCA is allowing firms longer to respond to these complaints. And you are also allowed longer to send your complaint to the Ombudsman. It is still good to start the process now, but it may take a while.
You may get one of the following types of reply back;
- we don’t have to answer this for at the moment as the FCA has allowed us to pause complaint handling
- we don’t any records because of the age of your finance
- we have never used discretionary finance
- no discretionary finance was used in your case
- a description of the commission arrangement that was unclear or difficult to understand about whether discretionary finance was used
- discretionary finance was used.
If you could leave a comment below this article, this will help build a picture of who is most likely to be able to make a claim.
You do NOT need to use a claims company
You don’t need a claims company to do this or a firm of solicitors. It is simple to do yourself and a claims company will take a very large amount of any refund that you get.
It will not be quicker to do with a claims company or solicitors. They don’t have lists of who has valid claims, they will ask the same question that you can. Nor will you get more compensation that way.
IMPORTANT could you also make an affordability complaint?
These undisclosed commission complaints are not the same as affordability complaints.
But if your car finance was very hard to pay from the beginning, it may have been “unaffordable”. You may have had to get behind with other debts or borrowed more in order to be able to pay the car finance.
Here you may be able to win an affordability complaint – see Were you sold a car on unaffordable car finance? for details and how to make an affordability complaint.
NB it can be hard to win an affordability complaint unless you have good evidence about your finances at the time the finance started, such as bank statements. These are easy to get for the last 6 years even if you have changed bank accounts. But a long way back can be tricky even if you are still with the same bank. This issue isn’t relevant for discretionary commission complaints, only affordability.
If you win an affordability complaint you will get all the interest refunded. In a discretionary commission complaint you only get part of it back.
So I suggest you make the affordability complaint first. Because if you win you will get a larger refund. And affordability complaints are likely to be quicker than discretionary commission complaints. If you lose, you can then revisit the undisclosed commission complaints later.
Any questions?
Ask them in the comments below! These claims are very new, so finding out what other people are doing and the sorts of responses they get can be a great help.
Car finance affordability complaints
How to ask for refunds for all types of debt
My energy DD can’t be right!
HG says
Hi Sara – for info. I recurved the following from FOS regarding my complaint about discretionary commission (motonovo).
We’ve received a number of complaints like yours about commission paid, or interest rates applied, when a car finance agreement was entered into.
What we’re doing
Some of the issues raised in this and similar complaints we’ve received are new. To make sure they are handled fairly and consistently – bearing in mind the individual circumstances of each complaint – we’ve been developing our approach.
This means it’s taking longer than normal to give answers on these cases. We can’t tell you exactly how long it’s going to take. But we’ll be in touch with an update within three months, or when we’re ready to take the complaint forward if it’s sooner.
What we need from you
While we’re developing our approach, we’re gathering relevant information to make sure we have everything we need when we’re ready to take the complaint forward. If you haven’t already, please send us copies of:
your finance agreement
any documentation setting out the terms on which the dealer/broker was engaged to act for you
any other documentation given to you by the dealership.
Dion says
So around 18 months ago i submitted a complaint to blackhorse about mis sold car finance due to me believing discretionary interest might of been used in my case. They wrote back to me and denied any wrong doing and said i had taken out the finance so basically tough luck. Around 4 months ago i requested confirmation of whether discretionary interest had been applied they replied with confirmation. Where do i stand now ?
Sara (Debt Camel) says
What was the date of the reply from BlackHorse to your first complaint? Could you copy in what it said?
Robert Brown says
I sent the below email to Black horse over 3 weeks ago and zero response has been received back. I have been checking my spam folder.
BHComplexComplaints@blackhorse.co.uk
Hello there,
I had car finance from you in [2019] – the reference number was – xxxxxxxxx
After reading the information from the FCA in January 2024. about complaints over discretionary commission arrangements on car finance, I would like to know what commission was paid.
I would like you to tell me if you used a discretionary commission arrangement on my finance and to give me details of that arrangement. This is a query not a complaint, I am just asking for the information.
Regards
Robert xxxxxx
Anyone got any further advice for me please?
Thanks
Rob
Sara (Debt Camel) says
Wait until it gets to 8 weeks.
Robert Brown says
I will update this website when I get any more info to share from now on:
Update:
I rang the below number yesterday which I pulled from an earlier Post.
0800 022 4844
I told the person I had sent an email over 3 weeks ago and that I had no response. I was advised to send an email to the below address which i did yesterday:
motorcommission@blackhorse.co.uk
I have had the below reply today which was quick, not to much to get excited about but at least I know that they are looking into it for me.
We’ve received your request
Dear Customer
We’ve received your request to check if there was a discretionary commission arrangement on your motor finance agreement with us. We’re experiencing a high number of enquiries at the moment and it’s taking longer than usual for us to respond.
We’ll get back to you as soon as possible. If we need further information, we’ll get in touch with you using the contact details you’ve provided.
Thank you for your patience while we look into this for you.
Yours sincerely
Customer Services
http://www.blackhorse.co.uk
Ernest says
Good afternoon Sara.. pls l need your advice on car insurance… l have car accident and my insurance Aviva accept my offer for me to repair my car on my own garage and they paid my cash to repair it on my own.. which my repair garage send the estimate to repair for £3700 my car and the Aviva enginer told me on the phone l will get £3700 to my account.. but only received £2292 instead of £3700 and then make complain to them and they told me to go to financial Ombudsman which l did .. the adjudicator did not up-holding my complain.pls any advice and adjudicator email attached below
I wrote to Aviva Insurance Limited (Aviva) with regards to the call you had with the engineer.
Unfortunately, the calls with the engineer are not recorded, but as the engineer report clearly states their estimate as £2,292, I’m not persuaded they would’ve told you the amount you would be receiving was £3,700
So, this doesn’t change my opinion on the outcome.
As previously advised, Aviva have acted reasonably and within their terms and conditions. Their engineer has provided an expert report, so unless further evidence is submitted that challenges this report, it’s unlikely an Ombudsman would reach a different decision.
T
Sara (Debt Camel) says
i am sorry but I have no experience with this sort of insurance problem.
Paul Harrison says
I had a finance agreement with Close Brothers from around 2016. I only heard about this yesterday. Went to their website and they have a form to complete. Very simple to do and got an email today saying that I did, indeed have such a finance arrangement. That I should do nothing more now but they will contact me at the end of September to update me on my case. Actually very professionally handled in my opinion although I’m sure they don’t have a choice.
Sara (Debt Camel) says
Yes some of the bigger lenders are now setting up these forms.
Good, so now you know where you stand. nothing to fo now until the FCA reports on the way forward near the end of September.
Rob Buttery says
I’ve had an email from Black Horse saying that there was a discretionary commission arrangement on my finance for my old car. They say they will respond in 8 weeks. Its been over 8 weeks – what do I do now? If they do offer you an amount – how do I know that amount is what I’m owed?
Thanks Rob
Sara (Debt Camel) says
now you wait until the end of September probably. The FCA will issuing a report on the way forward in late September.
nigel couldwell says
Hi Rob, Just sit and wait now till september. I had it confirmed from santander they did give incentives to my car dealer, you have had it confirmed by your lender like me so we wait until the next stage in september.
Julita says
HI. I was taking a partner finance in Barclays. Car. In 2018 I paid everything back, will I also be entitled to a refund?
Sara (Debt Camel) says
Probably if you paid discretionary commission. The only way to find out is to ask.
Susan says
I had a motonovo finance agreement and they have messaged back and accepted there was an issue with the agreement. From that point how long have has it taken people to get an amount offer or how long has the final process taken. Thanks
Ps love this website
Sara (Debt Camel) says
They said there was discretionary commission? Then you have a claim, but all claims are now waiting for the FCA to write a report on the way forward, probably late September. No one is getting offers at the moment.
Elaine Davies says
I think the decision has been delayed even further to May 2025.
Sara (Debt Camel) says
The FCA is consulting on moving the deadline.
Jack says
Hi,
I placed an enquiry at black horse using the same format seen in the past comments and they said they’d update me in the future. My enquiry was in March. The only update I’ve had since is –
“You recently asked us to check if there was a discretionary commission arrangement on your motor finance agreement. We have your request and at this stage we don’t need you to do anything else. We’ll get back to you to confirm as soon as possible.
It’s taking longer than usual due to the high number of enquiries we’re receiving at the moment.
Thank you for your patience while we look into this for you.”
Is it a case of waiting until September as stated in previous comments or can I do more ?
Thanks.
Sara (Debt Camel) says
I suggest you reply to their email asking if there ahs been any progress.
The September date is likely to slip if the FCA decides to extend this. But that is for replying to a formal complaint. T
There is no reason why you should not be told at this point whether or not there was any discretionary commission paid.
Andy says
I had a PCP agreement brokered by Land Rover Financial Services and provided by Blackhorse.
They have confirmed a DCA was used in my agreement, nothing further from them yet
Gabriel says
Hi,
Had an enquiry with Motonovo and they admitted that there was a discretionary comission on my van pcp and registered the claim.
Last week Motonovo sents me another email containg the following
Update on your DCA complaint
Hello,
The Financial Conduct Authority (FCA) has proposed extending the current pause on the usual 8-week deadline for us to respond to complaints, where there was a discretionary commission arrangement in place.
They’re intending to announce the findings of their review and next steps in May 2025.
While they’re completing their review, they have proposed extending the deadline that providers have to respond to car finance complaints where there was a discretionary commission arrangement in place, from 26 September 2024 to after 4 December 2025.
More information can be found on the FCA website.
We will continue to keep you updated on any further changes.
ads says
Hi Sara,
I wrote a while ago about issues with Barclays Partner Finance and supplied their new email address as per the website.
Well, after sending 3 emails (Jan, Jun, Jul) and including FOS on the latter – only the FOS has responded.
FOS have registered my complaint but have basically said to get in touch with Barclays Partner Finance to see if they have my complaint.
I finally found the help line (0800 152 2888 – option 3 for Car commission) and spoke with someone and pointed out that emails have been sent to bpfcomplaints@barclays.com & bpfmotorcommissioncomplaints@barclays.com.
They confirmed that NONE of my emails had been received.
If people on here are awaiting any confirmation of complaint from Barclays Partner Finance, I would suggest giving them a call to ensure that this has been received
Sara (Debt Camel) says
I agree that anyone who has been waiting more than 8 weeks for a reply should phone then.
But bpfmotorcommissioncomplaints@barclays.com is the email address on the BPF page (https://www.barclayspartnerfinance.com/home/motor-commission/) so it should work!
Rob Evs says
Does anyone know the cut off date to claim . So what’s the last date you can submit a claim for discretionary commission payments made to the motor dealer ?
Thanks
Sara (Debt Camel) says
There is no cut off date. The reason for getting going now is so you can find out if there was discretionary commission.
Ciara says
Hi Sara, would you have an email address for dacia finance? I have searched the Internet but cannot seem to find any. Thanking you I’m anticipation x
Sara (Debt Camel) says
Are you sure that was the name of the finance company? They currently use Mobilze. It’s possible that Mobilze took over your finance if that doesn’t ring a bell, so try motorcommissionenquiries@mobilize-fs.com
Tim Fawcett says
Before Mobilze our Dacia dealer were using RCI Financial Services Ltd, if that helps
Ciara says
Many thanks ill look into this
Ciara says
Hi Sara
Many thanks for coming back to me. We have the yearly statements and they are from dacia finance. I’ll have another look at them to see if says anything else. Thank you for replying.
Steve Norton says
Just got my Info Request reply back from BlackHorse to say there was a DCA involved and they’ve invited to make a complaint via their website.
Would be very interested to see a template letter request, their website has 2 main sections to complete:
Tell us about your complaint:
How do you feel we can put this right:
Sara (Debt Camel) says
Tell us about your complaint:
I feel the discretionary commission charged was unfair as it led me to pay a higher interest rate. As i was unaware of this at the time, I had no opperunity to negotiate this or to potentially look elsewhere.
How do you feel we can put this right:
i would like a refund of the additional interest I paid because of this discetionary commission, as per the Ombudsman’s key decisions on car finance in January this year.
Robert Brown says
When did you make the request please Steve? I have been waiting months to hear back from them now.
Steve Norton says
Initially in May of this year.
Had been getting a monthly “We have your request(s) and at this stage we don’t need you to do anything else. We’ll be in touch with an update in the next 28 days. It’s taking longer than usual due to the high number of enquiries we are receiving at the moment.” until I had the physical letter through the post to say there was a DCA on my loan.
The website they sent me to pretty much looks exactly the same as the one I used back in may, but at least the letter they send me contained the agreement number on it.
Not sure this hasn’t just sent me all the way back to Square 1 though.
Sara (Debt Camel) says
no, Square 1 was asking if you had paid DCA. You now know you did. Putting in a complaint now is a formality.
But nothing quick is going to happen until the FCA comes out with its report, now expected by May 2025.
Anthony Hall says
Hi Sara, there was mention of December 2025? Why is that a relevant date? Is it that no claims will now be settled/reviewed until December 2025?
Thanks
Sara (Debt Camel) says
That the date by which the FCA expects that any new Rules that are needed will be final . See the update at the top of this article.
Cc says
My latest email from Black horse Oct 4th:
We’re looking into your information request
You asked us to check if there was a discretionary commission arrangement on your motor finance agreement(s). We have your request(s) and at this stage we don’t need you to do anything else.
We’ll be in touch with an update in the next 28 days. It’s taking longer than usual due to the high number of enquiries we are receiving at the moment.
If there’s anything else you’d like to tell us about your request
You can email us at motorcommission@blackhorse.co.uk
Or
Call us on 0800 022 4844. Our opening hours are Monday to Friday 8.30am – 6pm and Saturday 9am – 1pm.
You can also write to:
Customer Resolutions Operations
St William House
Tresillian Terrace
Cardiff
CF10 5BH
Please don’t reply to this email directly as the mailbox isn’t monitored.
Yours faithfully
Customer Services
Black Horse
Still no admission per se.
Ben says
If I have received confirmation my agreement did have discretionary finance, however not had final response to my complaint afterwards (June ’24) should I forward to the Ombudsman?
Or is this not irrelevant with new ruling dates and I just have to wait?
Sara (Debt Camel) says
I am afraid it’s best to just wait. The regulator has extended the pause lenders have to reply to complaints- if you send the case to the Ombudsman now it won’t be considered as the lender hasn’t replied to the complaint and, because of the pause, is still in the time allowed to do this.
Natasha says
Hello
I have had numerous car finance agreements with various companies including Close Brothers, Motonovo and Black Horse since 2007. What is the best way to get the agreement details as I can’t find any paperwork or emails with reference numbers. I can remember some car regs but not all.
TIA
Sara (Debt Camel) says
Ask, and give as many details as you can.
Natasha says
So just go to each lender directly and see what information they hold?
Sara (Debt Camel) says
Yes. The MSE tool will generate an email and who to send it to