Car finance has long been a convenient way for UK drivers to spread the cost of purchasing a vehicle. However, a growing number of consumers are discovering they may have been misled. Hidden commissions paid to car dealerships and brokers have led to thousands of compensation claims. If you’ve taken out a car finance deal in the past, you could be owed money.
What Are Hidden Commissions in Car Finance?
Hidden commissions occur when a lender pays a dealership or broker a fee for arranging a car finance agreement. The issue arises when these commissions influence the interest rates offered to customers. Many borrowers unknowingly paid more because brokers had a financial incentive to increase rates. The Financial Conduct Authority (FCA) banned discretionary commission models in January 2021, but many past agreements still contain unfair charges.
Why Are Consumers Filing Complaints?
Consumers are seeking compensation because they were not informed about these commissions at the time of signing their agreements. Many were led to believe they had secured the best available rate when, in reality, their broker increased the interest rate to earn a larger commission. The FCA has been reviewing complaints and assessing whether widespread refunds should be issued. A significant number of affected customers have already submitted claims, with some receiving thousands in compensation.
How Much Compensation Could You Receive?
The amount of compensation varies based on the level of overpayment caused by the commission. Some claims have resulted in refunds of £1,000 to £10,000. If you were charged a higher interest rate due to a hidden commission, you could reclaim the extra interest paid plus compensation for any financial harm. The claims process depends on providing evidence of unfair lending practices, which many legal firms now specialise in handling.
Can You Make a Claim?
If you financed a vehicle between 2010 and 2021, you could be eligible for compensation. Reviewing your finance agreement and checking for undisclosed commissions is the first step. Many firms offer free initial assessments to determine whether you have a valid claim. The Financial Ombudsman Service (FOS) has been handling an increasing number of cases and ruling in favour of consumers who were misled by lenders and brokers.
What Should You Do Next?
The first step is to contact your finance provider and ask for a breakdown of the charges on your agreement. If they refuse to disclose the commission, you can escalate the complaint to the Financial Ombudsman. Many consumers have also lodged an Oodle car finance complaint, as the company has been named in several compensation claims. If your lender fails to offer a satisfactory resolution, you may want to seek legal assistance to recover your money.
The Future of Car Finance Regulations
The FCA’s crackdown on hidden commissions aims to prevent lenders from exploiting borrowers. However, millions of past agreements still contain these hidden fees, leaving many UK drivers unknowingly out of pocket. Experts predict that compensation claims will rise further as more people become aware of their rights. If you believe you were mis-sold a car finance deal, taking action now could help you recover money that rightfully belongs to you.
Final Thoughts
Hidden commissions in car finance deals have cost UK consumers thousands of pounds in extra interest. With the FCA and Financial Ombudsman reviewing claims, now is the time to check your agreement and seek redress if you were misled. If you suspect you overpaid due to an undisclosed commission, don’t wait—start your claim today and get the compensation you deserve.
