Santander Car Finance Claims: Can You Get a Refund?

Santander is a major motor finance provider in the UK. Since then, hundreds of UK customers have relied on the lender to finance their vehicle purchases through Personal Contract Purchase (PCP), Hire Purchase (HP), and other forms of financing. However, recent investigations and regulatory scrutiny have highlighted troubling issues with the way that some of these agreements were sold. Due to this, hundreds of people are now looking into the option of filing a Santander car finance claim to reclaim overpaid interest or compensation for car finance mis-selling.

There are repercussions across the industry as multiple firms have been named in public debate and the regulator spotlight, including Santander. The FCA has focused on reviewing practices where brokers received discretionary commissions which permitted them to adjust interest rates to earn greater payments. The practice was not always disclosed to consumers, which artificially inflated costs. This has resulted in an increasing awareness that previous Santander finance customers may have overpaid for their car finance.

The bank’s practices have come under public scrutiny as part of a larger investigation by the FCA into historical misconduct. At the time of writing, Santander has not been individually sanctioned but has made provision for compensation payments as a precaution. This includes allocating financial reserves as part of a Santander motor finance compensation provision to reflect its expected liability across many customer agreements.

If you have concerns about past agreements, this is an important time to know your rights and defend them if warranted. In this article, we will explain the key eligibility factors, how the claims process works, and everything Santander customers need to know about claiming a Santander car finance refund.

The Role of Discretionary Commissions

Discretionary commissions are a type of arrangement whereby brokers like car dealers are permitted to determine interest rates on finance contracts. The higher the interest rate they used, the more commission they earned. These commissions were very rarely made known to consumers, who had no idea until recently that the cost of their finance agreement had been pumped up for the broker’s gain. The FCA has ruled this practice unfair and potentially harmful to consumers.

There have been suggestions that in Santander's case, such arrangements were employed in a sizeable number of their arrangements. Although the bank asserts that it met legal standards at the time, customers who were harmed may be entitled to redress. This would be considered Santander mis-sold car finance if a customer was not made aware of the commission, or of an opportunity to compare different offers. In numerous instances, consumers would often accept the dealer’s offer without knowing that more favourable terms could have been negotiated.

The increasing number of claims stems from a lack of transparency regarding commission arrangements. With the media attention the issue has received and the involvement of the FCA, consumers are becoming increasingly aware and many are deciding to find out if they have a claim for unfair treatment. As a result, there has been a recent increase in interest in Santander finance claims, as well as a larger discussion on the matter of mis-selling in the car finance industry.

FCA Scrutiny and Industry-Wide Investigations

The FCA has turned the spotlight on lenders and brokers in the car finance sector. The regulator started reviewing past car finance deals with Santander and other providers in early 2024. This resulted in a temporary pause in complaint handling, which was intended to give the FCA sufficient time to formulate a process for ensuring a fair and consistent approach to tackling consumer issues.

The FCA has requested information from major motor finance providers as it looks to assess how widespread the use of discretionary commission is. The findings will determine what distribution of compensation is made, and if banks, such as Santander, will be asked to proactively refund affected customers. For consumers, this means Santander car finance claims made during this period may take time to process, but won’t be denied.

Santander has responded with financial provisions for future payouts. This Santander motor finance compensation provision shows that the bank believes that there will be a substantial number of valid claims. It is, however, not an admission of wrongdoing, but an indication that the firm is resolving past issues rigorously.

Who Can Claim

Those who've taken a finance agreement with Santander on a car between April 2007 and January 2021 may be able to claim back a PCP refund if they've been mis-sold the contract. Eligibility typically depends on whether the customer was provided clear, accurate, and complete information about key elements of the deal, including interest rates, broker commissions, and repayment terms. If the finance was arranged via a dealership, a broker, or by virtue of a discretionary commission not being disclosed, the odds of a legitimate Santander car finance claim more than stack the odds in your favour. In fact, customers with settled agreements or even customers who've since disposed of the vehicle may also be due compensation if mis-selling is identified.

Common Mis-Selling Indicators

Mis-selling is when a financial product is sold in a deceitful or underhanded manner. Some Santander customers have told us that this is the case with them and that they were not, at the time of entering into their car finance agreements, provided with full, fair, or accurate information. Here are some markers that might indicate a claim is legitimate.

Lack of Commission Disclosure

Perhaps the most common issue cited relates to the failure of auto lenders to disclose a commission arrangement between dealers and lenders. The dealer was often able to adjust the interest rate on many of those Santander finance agreements, effectively in order to secure a higher commission. But this was very often not explained to the customer. You might have been mis-sold if you did not know a broker or dealer got a commission on your deal — and, particularly, if that commission raised your interest rate.

Unexplained Costs or Terms

Full clarity on financial commitments being made is a major red flag in finance agreements. This routinely consists of balloon payments at the end of PCP contracts, excess mileage fees, early closing penalties, or optional final payments. If these terms weren’t explicitly explained to you, or if you were informed of them only after you signed the agreement, this may amount to mis-selling. 

Pressure to Sign Quickly

Another complaint raised by customers is aggressive selling tactics in the dealership. If this agreement had to be signed the same day, without persuasive language encouraging you to consider other options or time to read the contract in its entirety, the process may not have been equitable. Some consumers were advised that the offer was time-limited or that delaying it would lead to increased costs. Such tactics may hinder informed decision-making and may form the basis of a Santander PCP claim.

Unsuitable Agreement Type

Not every consumer is suited to every type of car finance agreement. If a dealership persuaded you to select a PCP contract without reviewing your financial circumstances or discussing other options like HP or personal loans, you could have been given inappropriate advice. A slightly more difficult example would be PCP deals which may require a final one-off 'balloon' payment that some customers may not be able to fund. If you later discovered that you were mis-sold the agreement because it did not suit your needs or situation, you could be mis-sold again if the agreement doesn't suit what you want.

These are not all the signs to look out for though and the above themes are some of the most common Santander car finance mis-selling issues. If any of these resonate with you, it could be worth looking into the option of making a formal Santander finance claim.

Eligibility Criteria

Santander car finance agreement holders are not automatically entitled to compensation. However, many cases do fall under consumer protection rules and industry best practices. To determine if you are eligible, refer to the following conditions:

UK Agreement within Relevant Timeframe

Your finance agreement must have been entered into within the United Kingdom. The majority of claims are accepted, provided they occurred within the past six years. But if you’ve only just discovered you were mis-sold something, for example after finding commission charges you weren’t aware of, you may still be able to claim the “date of knowledge” rule.

Broker or Dealer Involvement

Many claims come from agreements established through third-party brokers or car dealerships. If your Santander finance agreement was arranged through a dealership, it is more likely that commission discretion was used. If you were unaware of the commission, this further strengthens the grounds for a Santander car finance claim.

Lack of Clear and Accurate Information

You need to be able to demonstrate that you weren’t informed accurately or completely of your arrangement. That includes lacking information about commissions, repayment terms, or final charges. If the information provided was misleading or incomplete at the time of sale that can be grounds for a Santander car finance refund.

Supporting Documentation

While not completely necessary, forms like a copy of your finance agreement, emails between you and the dealer, or evidence of payment can help back you up in your case. These documents help claims assessors establish whether the agreement was mis-sold. Partial records of the conversation over the sale or memory of that can still be proven to a claim, even if you do not have all the paperwork.

Customers no longer in possession of the vehicle or who have already paid it off may still be eligible for compensation. Successful Santander compensation claims are not exclusive to live agreements and most individuals will only realise they have been signed up for complaint loans, several years down the line. If you come to find that your experience matches those criteria, you may want to start the claim process as soon as possible.

Was I Mis-Sold?

By answering the following questions you can see if you have possibly been mis-sold your finance agreement:

• Did you know that the dealership or broker could change your interest rate to get a bigger commission?
• Were you given clear explanations of all terms, including final payments, penalties and total cost in borrowing?
• Did you see more than one finance deal, or were you encouraged to take one deal and no other?
• Was there even clear information on which to base a decision, or were you hurried into a choice?

If your answer to any of these is “no,” it’s worth looking into further. If you have a Santander PCP claim or a similar complaint, this could lead to financial redress.

How Refunds Are Calculated

The amount of a Santander car finance settlement is determined by how much the customer overpaid due to the mis-sale. In discretionary commission instances, this often comprises a reimbursement of excess interest and associated charges. The amount will depend on the agreement’s terms, size of the loan, and the time frame.

Refunds might also factor in a bit of interest to cover the time the lender held onto the money. That is usually calculated at a statutory rate. The settlement can also lead to any remaining balance being lowered in some cases. In case, the customer has paid off the agreement in full, they may be issued a lump sum payment.

Compensation is to put the customer back financially to what their position would have been if they had not been mis-sold. Both lenders and regulatory bodies use this principle to determine refund amounts.

Conclusion

If you took out any car finance agreement with Santander and did not receive clear information regarding crucial aspects like commissions, final repayments, or the total cost of borrowing, you could be eligible for a mis-sold finance claim. Thousands of similar cases are now being reviewed and Santander has already set aside money to pay for compensation. You might even be due for a refund if your agreement has already ended. Due to the complexity of the claims process and the evidence needed, getting expert support can have a critical impact on the outcome of your case. Don’t sit back waiting for the lender to do its due diligence — if you suspect your finance was mis-sold, take the initiative and involve a professional to pursue the compensation you may be entitled to.