Mis-Sold Car Finance: How Complaints Work and What to Expect
Commission arrangements on motor finance have been under regulatory scrutiny. What that means if you think you were mis-sold.
For years, dealers arranging car finance could earn more commission by placing customers on a higher interest rate. The customer signed a form, drove away, and had no idea the rate reflected the dealer’s commission rather than their own creditworthiness.
That practice has been the subject of sustained regulatory attention from the Financial Conduct Authority, and it is why a very large number of people are now asking whether their agreement was mis-sold. The topic sits alongside broader questions about car finance compensation.
What Mis-Selling Actually Means Here
The central issue is disclosure. If the commission arrangement created an incentive to charge you more, and that was not properly explained, the argument is that you could not give informed consent to the deal. Other grounds exist — affordability not properly assessed, products added without clear agreement, terms misrepresented.
Discretionary Commission Arrangements
Image source: pexels.com
The specific arrangement that attracted most scrutiny allowed the broker to set the interest rate within a range, with their commission rising as the rate rose. Two customers with identical credit profiles could pay very different amounts depending on who sold to them.
The Regulatory Position Keeps Moving
This area has changed repeatedly, including on timescales, which agreements are in scope and how complaints are handled. Any article stating the current position dates quickly. Check the Financial Conduct Authority website directly before relying on anything, including this page.
You Do Not Need a Claims Company
Complaints can be made yourself, free, first to the lender and then to the Financial Ombudsman Service if you are unhappy with the answer. Claims management companies typically take a substantial percentage of any award, and they do nothing you cannot do with a letter and some patience.
If you do use one, they must be authorised, the fee should be clear before you sign, and you should never be charged before an outcome. Cold calls and texts about car finance claims warrant particular caution.
Beware Payout Calculators
Online tools promising to calculate your compensation are marketing instruments. Any outcome depends on your specific agreement, the rate charged, the commission structure and the period involved. A figure produced from three inputs on a webpage is a lead-generation device rather than an estimate.
Find Your Paperwork First
The agreement number, the lender, the dealer, the date, the amount borrowed and the interest rate are what any complaint needs. If you no longer have the documents, the lender must generally provide information about your agreement on request.
Which Agreements Might Be Affected
The scrutiny has focused on personal contract purchase, hire purchase and similar arrangements sold through dealers and brokers — including on used car finance and specialist purchases such as camper van finance. If you bought a car on finance arranged at the point of sale, it is worth checking.
How to Complain
Write to the lender, not the dealer. State the agreement details, that you believe commission arrangements were not adequately disclosed, and that you want the matter investigated. Keep it factual and short. Ask for a final response.
If the Answer Is No
Refer it to the Financial Ombudsman Service within the time limit stated in the final response. The service is free, and it decides on what is fair and reasonable rather than purely on strict legal argument, which frequently works in consumers’ favour.
Do Not Stop Paying
A complaint does not suspend the agreement. Missing payments while a complaint runs causes arrears, damages your credit file and complicates the resolution. Continue paying until something is formally agreed.
Affordability Complaints Are Separate
Distinct from commission, some complaints argue the lender never properly checked whether the agreement was affordable. If you were approved despite obvious signs you could not sustain the payments, that is a different ground with its own reasoning.
Add-On Products
GAP insurance, paint protection, warranties and service plans are frequently sold alongside motor finance. Where these were added without clear agreement, priced opaquely, or presented as compulsory when they were not, that is a legitimate complaint in its own right.
Time Limits Apply
There are limits on how far back complaints can go and how long you have after a final response. They are not simple, and they have been the subject of specific regulatory attention in this area. Do not assume an older agreement is out of scope without checking.
Complaining About a Broker or Dealer
Where the problem was how the sale was conducted rather than the lending itself, the broker may be the correct respondent. Both should be on the Financial Services Register, and if you are unsure who to complain to, complain to the lender and say you believe the broker was at fault — they will generally route it.
Joint Agreements
Image source: pexels.com
Where two people are named on the agreement, either can generally raise a complaint, though lenders may want both to confirm. Any redress is usually treated as belonging to both, which matters where circumstances have changed since the car was bought.
Settlement Figures and Early Exit
If you want out of an agreement regardless of any complaint, ask the lender for a settlement figure — the amount to clear it today. It is not simply the remaining payments added up, because a rebate of future interest usually applies. Get it in writing, since figures are time-limited.
If the Lender No Longer Exists
Companies merge, sell loan books and occasionally fail. Complaints can generally still be pursued against whoever now holds the obligation, and where a firm has failed there may be a separate compensation route. Do not assume an old agreement is untraceable.
Keep a Record of Everything
Dates, who you spoke to, what was said, and copies of every document. Complaints of this kind can run for months, staff change, and a contemporaneous record is what keeps your account consistent when the file is reviewed.
Realistic Expectations
Realistic Expectations
When Nobody Will Lend at All
A refusal is a different problem from a complaint, and the response is different too. Refused car finance everywhere covers what to check before making another application.
Check Who You Are Dealing With
A complaint route depends on the firm being regulated in the first place. Car finance and FCA authorisation covers how to verify that before signing anything.
Not every agreement was mis-sold, and not every complaint succeeds. Where one does, redress generally aims to put you back in the position you would have been in, which is not the same as the headline figures circulating online. Approach it as a legitimate complaint worth making rather than as an expected windfall.
