IMPORTANT INFORMATION - MOTOR FINANCE COMMISSION
Discretionary Commission Arrangements
Following the legal certainty provided by the Supreme Court on 1 August 2025, the FCA announced on 3 August 2025 that it will commence consultation on an industry-wide scheme to compensate motor finance customers who were treated unfairly, which will include the use of Discretionary Commission Arrangements between the lender and the dealer/broker.
Advantage Finance can confirm that it has never used any form of Discretionary Commission Arrangement and has never allowed the broker to influence the interest rate for any potential customer.
Non-Discretionary Commission Arrangements
The Supreme Court Decision has provided the legal clarity that motor dealers/brokers do not owe a fiduciary duty to customers and has therefore overturned the related claims that were previously successful in the Court of Appeal.
In one of the cases, 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 has confirmed that it is going to look at this situation further as part of its consultation into a redress scheme.
Advantage Finance can confirm that, where a commission has been paid, it has been on a flat-fee basis which is a form of non-discretionary commission arrangement. Flat-fee commission is where the same amount is paid regardless of the size/term of the loan. In the case of Advantage Finance Ltd, this does not affect the interest rate paid by the customer.
Complaints about Motor Finance Commission
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”. If you wish to make a complaint about motor finance commission, you can raise this with us directly.
The FCA has introduced a pause for firms in the handling of commission related complaints and this is currently in place until 4 December 2025. Any complaint received about the payment of commission will be subject to the pause and will therefore, unless instructed otherwise by the FCA, not be responded to until 4 December 2025.
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.
Following the Supreme Court decision, the FCA have announced that it will consult on creating a compensation scheme for motor finance customers. This will be intended to provide redress to customers who may have lost out due to unfair or excessive commission arrangements between motor dealers and lenders.
The exact nature of the scheme is as yet unknown, but the FCA intend to hold a 6-week consultation of potential approaches in October 2025 and have stated their intention to have the scheme up and running by early 2026.
In the meantime, there remains in place a pause on the handling of commission complaints made to firms until 4 December 2025, although this may be extended further by the FCA.