If you took out car finance before January 2021, you could be owed compensation due to hidden commission fees, with the FCA investigating possible refunds
If you took out car insurance before 2021 you could be entitled to a refund. Many car finance agreements, particularly those taken out before January 2021, included hidden fees known as “discretionary commission arrangements” (DCAs), which meant you could have paid more than necessary. The good news is, it’s still possible to claim that money back, even if your agreement ended years ago. The Financial Conduct Authority (FCA) is investigating the issue and, if you’re eligible, you could be due compensation. However, the investigation could take until May 2025 to complete, so you may need to wait for a final decision. In the meantime it’s important you start your claim and get your complaint logged.
Who to complain to
The first step is to reach out to the lender who provided your car finance — not the broker or dealership. This is the firm you made payments to each month, and they are responsible for any potential overcharges. If you’re unsure who that is, check your credit report. Active agreements from the last six years should be listed, you can also check your bank statements. If the finance provider is no longer trading, you can submit your complaint to the administrator or liquidator but remember you may not receive the full refund.
There is an easy way to complain
To simplify things, MoneySavingExpert has launched a free complaints tool. This tool helps you quickly lodge a complaint with your lender, asking if they used a DCA on your agreement. It drafts an email for you, so there’s no need to go through a claims management firm, which typically takes a percentage of any payout. If the lender doesn’t respond, you can escalate the complaint to the Financial Conduct Authority (FCA).
What happens next?
Once you’ve submitted your complaint, the waiting game begins. If the lender confirms they used a DCA, your complaint will be logged. However, don’t expect a quick resolution. The FCA is investigating this issue and could take until May 2025 to decide how compensation will be distributed. If your lender denies using a DCA, you can still ask if any form of commission was applied to your finance agreement. Even without a DCA, you may be entitled to compensation for other forms of mis-selling, such as poor affordability checks or unclear terms. Be sure to share additional proof if the lender asks for it.
What can you expect to get back?
The FCA hasn’t yet announced how much compensation will be paid, but it’s likely to follow similar mis-selling cases, such as PPI. Some customers have already been reimbursed the difference between their inflated interest rates and the lowest rates available at the time.
