Thousands of people in the UK have been subject to undisclosed commission on financial products they have been sold, with many customers completely unaware the commission payments existed.
Reports have shown that the car finance industry is rife with secret payments and hidden commissions, meaning you could have been mis-sold your finance deal.
If you believe this to the be the case, Claim Experts can help you recover compensation.
What is Hidden Commission?
Hidden commissions occur when an agent, introducer, or finance broker sells you a loan or finance agreement from a bank or lender. In the case of car finance, it might be the car salesperson or dealership who brokers the finance deal.
If the car salesperson received a fee or commission for bringing the car finance deal to the bank, and the bank has not informed you of this, that is a hidden, secret, or undisclosed commission. The finance provider or bank must inform you of ALL of the fees within the transaction.
Below is a demonstration of the process:
You ➔ Car Dealership/Salesperson ➔ Hidden £££s ➔ Finance Provider/Bank
Even in this circumstance, a general statement that “a commission may be paid in certain circumstances” is not adequate enough. The car dealership must inform you at the point of the car sale how must the commission was. If they failed to do so, it is a form of fraud. Both the finance provider and the finance broker may be liable for potential claims.
In this sense, financial brokers like the car dealership, owe some duties to their clients, such as:
- Always act in the interest of the customer
- Never be loyal to any bank, lender, finance provider
- Always disclose any profit made to their customer
- Never enter a conflict of interest – such as charging higher interest for a higher commission
Secret Commission in car finance deals
Official reports from the Financial Conduct Authority have shown that the car finance providers have a habit of concealing the existence of any commissions offered by their brokers. In their investigation in regard to the mis-selling of Car Finance (PCP), they found that:
- Out of the 122 car dealerships visited by mystery shoppers just 11 car dealerships confirmed that commission will be added on this type of deal.
Conflict of Interest
This potentially leads to a huge conflict of interest. The car dealerships are supposed to be separate to the finance providers, but such discretion could lead to salespeople to adjusting interest rates in order to earn more commission from the deal. In essence, there is an incentive for the salesperson to broker a finance deal at a higher interest rate, to the detriment to the customer.
Some cases show that customers are being overcharged by over £1,000 in interest in order for the dealership to obtain a higher commission pay-out. The FCA estimates this could be costing consumers £300 million annually.
In addition to this, the FCA found that alarming number of the PCP (Personal contract purchase) firms have been carrying out this process without any regulation. These finance brokers often act without any oversight from the FCA which not only means the customer is not protected, but is also illegal.
Was my car finance mis-sold?
In relation to the hidden commission, your car finance deal may have been mis-sold if:
- The car salesperson did not fully explain they would receive a commission on the sale of the car
- The lender/bank did not fully explain the commission
- The salesperson skipped through the car finance agreement Terms & Conditions
- The customer felt pressured into the finance deal and was not given a range of options
- The PCP payments were unrealistic and no finance credit checks were carried out
The FCA bans hidden commission in car finance
In June 2020, the FCA banned commission linked to car finance deals outright. This means that car finance brokers won’t be allowed to charge a commission based on the interest rate offered from January 28th 2021.
This is particularly pertinent as figures show around nine in 10 new cars in Britain are bought on finance. The FCA estimate that the move will save consumers around £165million a year.
You are still able to claim compensation if you believe commission was hidden from you in a previous car finance deal.
How can I start my claim?
Claim Experts make starting your secret car finance commission claim easy. We have a team of experts who are on hand to talk you through the process. There is no obligation to use our service after we have performed our initial checks, and none of the checks will affect your credit score.
If you are one of the thousands in the UK that might have been affected by the undisclosed commission scandal, contact one of the Claim Experts team today and we will be in touch to talk you through the next steps.
There are no up front costs, and any payments to us will simply be deducted from your compensation award should your claim be successful.
How can Claim Experts help?
Have you been a victim of hidden car finance commission mis-selling? If you were subject to secret fees from your finance broker and/or bank, you may be entitled to compensation. Claim Experts can guide you through any potential claim, and we work on a No Win, No Fee basis, so there is no risk to you.
Our legal team come from a financial services and compliance background. We have experience of bringing successful claims against those who mis-sell financial products. We are regulated and authorised by the Solicitors Regulation.
At ClaimExperts.co.uk we make claiming for compensation easy:
- No Win, No Fee*
- No Upfront Payments
- An Expert Team
- Regulated and Authorised by The Solicitors Regulation Authority
If you would like to speak to one of our UK Hidden Commission Claims Solicitors you can do by calling 0800 0155 687, or by completing an enquiry form.
FCA to ban motor finance discretionary commission models – https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models
FCA March 2019 Report – FCA’s Work on Motor Finance – Final Findings – https://www.fca.org.uk/publication/multi-firm-reviews/our-work-on-motor-finance-final-findings.pdf