Car Finance Compensation: Key Facts You Need to Know about Complaint Eligibility

The vehicle finance sector in the United Kingdom is going through drastic changes affecting car finance compensation, primarily due to new rules and proposals by the Financial Conduct Authority (FCA). Here’s what you need to know: these updates make it easier for you to ask for car finance refund for mis-sold products. 

These key facts are made to help you understand the complaints process and guide you through every step of the way. If you think that your dealer, broker, or lender did not properly share all relevant details of your agreement, then you might be able to get a refund. 

Brief Overview on Mis-Sold Car Finance and Hidden Commissions

A recent ruling brought down by the Court of Appeal emphasised that brokers must clearly  disclose commission earnings to the consumer. With the recent developments, the FCA made important announcements to how complaint about mis-sold car finance are handled starting November 2024,

The FCA extended deadlines for consumers to file their complaints as well as enhanced definitions of mis-selling. First off, consumers are now given more time to secure final responses from their finance providers and decide whether they want to escalate the matter to the Financial Ombudsman Service (FOS). 

Secondly, this ruling made both non-discretionary commission arrangements (DCAs) and fixed commissions eligible for claims. Generally, mis-selling occurs in car finance when motor firms do not adequately disclose important details of the agreement. In this particular wave of complaints, mis-selling hinges more on commission earnings that customers were fully or partially unaware of. 

Take note that when these commissions are not disclosed, the total cost of the vehicle can be higher that it should be, leading to extra costs for you. With the Court of Appeal ruling, transactions can now be viewed as mis-sold if done without proper declaration of commission structures. 

When to File a Complaint with the Financial Conduct Authority

Complaints often arise when you feel misled about financial products or commissions that were not made clear. You might be wondering: how do you know if this applies to you? The answer is in your car financing contract. 

The Court of Appeal has ruled that all financial agreements should be made transparent to the consumer. If you were not made of the commission structure in place, especially one that affects the overall finance agreement, and have been charged more for your car finance, you may have grounds for a complaint. 

To put it simply, you have legitimate reasons to file a complaint with your motor company if your contract offers inaccurate representation of terms and conditions such as:

• undisclosed fees or commissions (e.g. hidden charges, DCAs, non-DCAs or fixed commissions, and flat fees),
• unfair arrangement of the contract,
• biased recommendation by the dealer caused by expected commission earnings,
• and failure to offer the best available rate.

Consumers who qualify to claim car finance redress under the FCA include individuals who have entered into a car finance agreement and who believe they have been misled about the financial product. You could also be an eligible complainant under the FCA if you were not properly informed about the commissions.

Complaints may be made in any situation, particularly for consumers who feel that brokers were not transparent with them and their payment prices have been adversely affected. You can report various concerns to your finance provider and wait for their final response before 

 Conclusion

The new updates and regulations imposed by the FCA, alongside other court decisions, have given consumers hope in pursuing refunds associated with mis-sold car finance agreements. These temporary changes in rules and regulations now offer additional opportunities to reclaim compensation.

If you remain unsure about your eligibility or even suspect that you have been charged unfairly, do not hesitate to consult a professional right away. The FCA is actively reviewing vehicle finance firms to better instil the principles of transparency and accountability within the industry.