IMPORTANT INFORMATION - MOTOR FINANCE COMMISSION
BEWARE OF SCAMMERS
The FCA has issued an alert that is has received reports of scammers pretending to be from motor finance lenders and approaching consumers to offer non-existent compensation in order to obtain personal information from them.
If someone calls claiming to offer compensation, consumers should hang up immediately.
The FCA has provided additional information on how consumers can protect themselves. Please click here.
FCA Industry Redress Scheme
On 30 March 2026 the FCA had announced the detailed rules of an industry redress scheme to compensate customers who were treated unfairly due to, where applicable, certain types of commission arrangements between lenders and motor dealers/brokers.
Its plans include the proposal to compensate customers who held agreements where a Discretionary Commission Arrangement was in place between the lender and the dealer/broker.
We can confirm that we have never used any form of Discretionary Commission Arrangement and have never allowed the broker to influence the interest rate for any potential customer.
The Supreme Court Decision provided the legal clarity that motor dealers/brokers do not owe a fiduciary duty to customers.
In one of the cases, however, the Supreme Court found the relationship between the customer and the lender to be unfair under s140 of the Consumer Credit Act 1974. Such findings are case specific and based on individual facts and circumstances.
The FCA is including in its redress scheme those customers who held agreements which were subject to high commission payments (greater than 39% of the total cost of credit and 10% of the loan advance), as well as in certain situations where there was a tied arrangement between the lender and the broker.
We can confirm that a very small number (around 1%) of our agreements between 2007-2024 are likely to be affected by the above announcement and we can also confirm that tied arrangements have never existed between ourselves and our brokers.
The redress scheme includes an implementation period of up to 5 months which will allow lenders to prepare for the delivery of the scheme and to contact those customers who may be due redress and who have already complained.
We can confirm that we will be contacting customers (or their representatives) and providing updates in accordance with the FCA’s expected timescales.
Claims Management Companies
The FCA have stated "We aim to make any redress scheme easy to participate in without needing to use a claims management company (CMC) or law firm. Using a CMC or law firm may end up costing customers up to 30% in fees of any compensation they receive".
The rules of the redress scheme require lenders to contact all customers who may be due to receive a redress payment under the scheme in a timely manner. Claims management companies do nothing to speed up this process or to increase your chances of success.
If you have already asked a claims firm to represent you then you should ensure that you do not sign further instructions with other claims firms without first ensuring that you have checked your existing contractual terms and conditions, as you may be liable for exit fees if you cancel your existing representation contract after your cooling off period.
The FCA and the SRA have recently issued a joint warning to claims management companies about the problems caused by multiple representation. For more information, please click here.
If you wish to make a complaint about motor finance commission, you can raise this with us directly.
Any complaint received about the payment of commission will be handled in accordance with the rules of the FCA redress scheme.
To find out more about this subject and the action being taken by the FCA please click here.
Please read our frequently asked questions below for more information.
Commission is the payment of a fee to a motor dealer or broker when a customer takes out a finance agreement.
The payment of a commission is the cost a lender bears for the acquisition of new customers. This is an alternative to other types of cost such as direct advertising (Internet, TV, Radio etc) or employing a high street presence and the additional staff required to undertake the work done by the broker. It also helps the broker to cover their own costs of advertising and for the work that they undertake in finding the right lender.
No. Our interest rates are set based only upon our assessment of credit risk. Customers may apply for finance directly to us and not use a broker at all, however the interest rate will be the same.
No. Our interest rates are set based only upon our assessment of credit risk. Customers may apply for finance directly to us and not use a broker at all, however the interest rate will be the same.
The amount of commission can vary depending on the arrangements between the broker and the lender.
The existence of a commission arrangement was made clear in the pre-contractual information that we sent directly to you, prior to you taking out the agreement. You agreed to the payment of the commission when you entered into the agreement. We were not required by the FCA to explicitly state the amount of the commission.
No. Claims Management Companies do not result in any better outcomes and, where a complaint is upheld, take a significant percentage of any redress. By contacting us directly with your concerns we can communicate directly and efficiently with each other.
Please click here to see or complaint procedure. This tells you everything you need to know about how to get in touch.
For many years, and as with many other areas of the financial services industry, motor finance lenders have paid a commission to motor dealers/brokers for the acquisition of new motor finance business. In doing so, lenders have followed rules set out by the FCA in relation to the disclosure of the existence of these commissions.
These rules did not require any disclosure of the amount of commission paid and the FCA has been satisfied that, where a commission is on a flat-fee basis, no consumer harm occurs.
Indeed, in the case of Advantage Finance, the amount payable by the customer would be exactly the same whether a commission was paid or not, because if a commission was not paid then the costs of acquiring new customers would be incurred in other ways.
The Court of Appeal, however, handed down a decision in October 2024 which ruled that any form of commission payment to a motor dealer can only be paid following fully informed consent by the customer.
This interpretation of the law goes further than any previous requirement, including previous authorities from the higher courts.
The Supreme Court therefore agreed to hear a further appeal of the cases involved in order to check that the decision made by the Court of Appeal is correct and, on 1 August 2025, handed down a decision which confirmed that the Court of Appeal had been incorrect in its understanding of the relationship between a motor dealer and a customer.
This decision has provided welcome legal clarity which will also bind decisions made by the lower courts in relation to any future claims.
On the 30th of March 2026, the FCA published rules introducing an industry-wide redress scheme aimed at supporting motor finance customers who may have been disadvantaged by unfair or excessive commission arrangements between motor dealers and lenders.
The scheme is designed to provide compensation in cases where there was inadequate disclosure of a discretionary commission arrangement, where commission levels were high (defined as 39% or more of the cost of credit and 10% or more of the total amount financed), or where a tied arrangement existed between the lender and the broker. All motor finance agreements entered into between 6th of April 2007 and 1st of November 2024 must be reviewed against these criteria.
Advantage Finance Ltd confirms that discretionary commission arrangements and tied arrangements do not apply to any of its historical business. Additionally, only a very small number of agreements would meet the threshold for high commission.
The scheme allows for an implementation period of up to five months. Following this, lenders are required to contact customers who may be eligible for redress, as well as those who have already submitted complaints, providing timely updates. Where applicable, any compensation due should be paid promptly.