Has a “secret commission” resulted in you paying more for your car finance?
If so, what can you do about this?
The car finance sector has been rocked by the discovery of widespread “secret commissions”, fees paid by lenders to car dealerships. The commissions might encourage car dealerships to charge customers a higher interest rate on their car finance, meaning the customer pays more over the life of the finance agreement, or the cost might be passed on directly to the customer as part of the finance cost.
Dubbed the “new PPI”, this has the potential to cost the car finance industry billions to put right in the form of compensation to affected consumers, and regulators are starting to take notice.
Please note that in registering an interest you are not instructing Leigh Day to act for you. You will not be obliged to sign up if we do launch a claim, and you will not be obliged to pay any fees unless you subsequently sign up and agree to our terms.
Any information that you provide will be held in accordance with our Privacy Policy.
What do I need to know?
In January, the Financial Ombudsman Service (“FOS”), a body that handles consumer complaints in the financial services sector, upheld two customers’ complaints against two different lenders about secret commissions, and directed compensation to be paid.
Around the same time, the Financial Conduct Authority (“FCA”) announced that it was launching a formal investigation into the matter. The FCA had previously reported that over 95% of the cases it examined had problems relating to secret and half-secret commissions which may have resulted in customers getting a bad deal on finance. They said in a typical scenario this could be costing customers an extra £1,100 per car finance agreement.
The FCA is now working to assess the scale of the problem, and what can be done about it, with one option being an industry-wide consumer redress scheme. An update on its investigation is due in May 2025.
Leigh Day is investigating the issue to determine whether this is something we can assist consumers with, on a no win no fee basis.
We are considering how we may be able to help car finance customers to submit complaints to their lenders and take further legal action, should that be necessary; or alternatively, if a redress scheme is established, how we may be able to assist consumers to apply for compensation under that scheme.
It is important to make you aware that you have various options for seeking any compensation you may be due or eligible for in connection with your vehicle finance agreement, if you have been overcharged as a result of a secret commission.
In particular, you have the option of making a complaint to your finance provider and, if they do not give you a satisfactory response, making a complaint to the Financial Ombudsman Service (“FOS”) yourself. This is a free service for determining disputes between individuals and regulated financial services providers. You do not have to instruct lawyers to make a complaint to the FOS.
Details of the FOS and the time limits that apply in respect of the FOS can be found by clicking here.
The usual time limits for finance providers to respond to complaints have currently been extended for car finance complaints, meaning these complaints may not get any response before the FCA gives an update on its investigation.
The FOS has a dedicated website for car finance related complaints which can be found here.
It is also important to make you aware that legal claims such as this have time limits. For some types of claims, the time limit is 6 years from the date you entered into a finance agreement. Other types of claims have a longer time limit.
If the time limit passes for you to bring a particular type of claim, you cannot rely on that claim.
Leigh Day is not able to advise non-clients on the time limits applicable to your potential finance claim.
The process is simple.
We will ask you a few basic questions like how many cars you have bought on finance between April 2007 and 28 January 2021, your vehicle registration number(s), whether you are already bringing a diesel emissions claim in relation to this car, and (if you know it) your finance provider, the total amount payable on your finance agreement, and how much interest you paid.
This will help us to investigate these claims and to assess how we may be able to help.
Register your interest now
If you think you may have been affected, register your interest now.
Vehicle Emissions
Is your car doing more damage to the environment than you think? Uncover the truth about your car’s emissions. Don’t let them get away with it.