Claiming Car Finance Compensation for Car Finance Broker Hidden Fees in the UK

Claiming Car Finance Compensation for Car Finance Broker Hidden Fees in the UK

Your Lawyers specialises in helping consumers uncover car finance broker hidden fees and secure the refunds they deserve.

If you have financed a car, van, or motorbike in the UK, you may be entitled to compensation due to undisclosed commissions and unclear finance terms. Recent rulings and investigations by the Financial Conduct Authority (FCA) have exposed widespread issues in the car finance industry, particularly around secret commissions and misleading agreements.

This article explains the issue, how to identify if you are affected, and the steps to claim compensation.

Understanding Car Finance Broker Hidden Fees and Undisclosed Commissions

The car finance industry in the UK has faced scrutiny for car finance broker hidden fees, where brokers or dealers may have received commissions from lenders without informing customers. These commissions, often tied to Discretionary Commission Arrangements (DCAs), could allow brokers to increase interest rates to boost their earnings, potentially costing consumers an estimated £300 million annually.

A landmark Court of Appeal ruling in October 2024 clarified that brokers must obtain informed consent from customers, disclosing the amount and nature of any commission. Failure to do so can be unlawful, potentially entitling you to compensation.

Additionally, unclear finance terms, such as undisclosed fees, ambiguous repayment structures, or lack of affordability checks, have left many customers overpaying. For example, not enough brokers reportedly adequately explained the total amount payable in Personal Contract Purchase (PCP) agreements, and too few clarified ownership terms. If you entered a finance agreement before January 2021, when DCAs were banned, you may have been mis-sold due to these practices. Your Lawyers can review your agreement to identify any hidden commissions or unfair terms.

How to Identify If You Are Eligible for Compensation

Determining eligibility for a car finance compensation claim involves checking for specific red flags in your agreement. You may be eligible if:

• Your broker did not disclose commissions: If your dealer or lender failed to inform you about commissions paid for arranging your finance, this can constitute a car finance broker hidden fee. General statements like “a commission may be paid” can be insufficient; the exact amount should be disclosed.
• The terms were unclear or misleading: If your agreement lacked transparency about interest rates, total costs, or ownership details (e.g., balloon payments in PCP deals), you may have been mis-sold.
• The finance was unaffordable: Lenders are required to conduct thorough affordability checks. If you were pressured into an unsuitable agreement, you could have grounds for a claim.
• Your agreement predates January 2021: Most claims involve agreements before the FCA banned DCAs, though non-discretionary commission issues may apply post-2021.

To confirm eligibility, gather your finance agreement, bank statements, or credit report to identify the lender and terms.

Steps to Claim Compensation with Your Lawyers

Claiming compensation for car finance broker hidden fees can be nice and straightforward with Your Lawyers. Our expert solicitors can operate on a no-win, no-fee basis, meaning you can claim worry-free.

The FCA is reviewing historical commission practices, and a Supreme Court decision expected in 2025 may lead to a redress scheme. By starting your claim now, you could be well-positioned to benefit from any industry-wide compensation.

At Your Lawyers, we make claiming easy, with no upfront costs and expert support throughout. Claim with us today for a free case review and take the first step toward recovering your money.

PCP Car Finance Claim Form

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