IMPORTANT INFORMATION - MOTOR FINANCE COMMISSION
BEWARE OF SCAMMERS
The FCA has issued an alert that is has received reports of scammers pretending to be from motor finance lenders and approaching consumers to offer non-existent compensation in order to obtain personal information from them.
Please note that there is no compensation scheme currently in place and motor finance lenders are not contacting customers about compensation. There is also currently a pause in place in the handling of commission complaints until 4 December 2025.
If someone calls claiming to offer compensation, consumers should hang up immediately.
The FCA has provided additional information on how consumers can protect themselves. Please click here.
FCA Industry Redress Scheme Consultation
Following the legal certainty provided by the Supreme Court earlier in the year, on 7 October 2025, the FCA published its consultation for a proposed industry-wide scheme to compensate motor finance customers who were treated unfairly.
Its plans include the proposal to compensate customers who held agreements where a Discretionary Commission Arrangement was in place between the lender and the dealer/broker.
We can confirm that we have never used any form of Discretionary Commission Arrangement and have never allowed the broker to influence the interest rate for any potential customer.
The Supreme Court Decision 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, however, 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 is proposing to include in its redress scheme those customers who held agreements which were subject to high commission payments (greater than 35% of the total cost of credit and 10% of the loan advance), as well as in situations where there was a tied arrangement between the lender and the broker.
We can confirm that an immaterial number of our agreements between 2007-2024 are likely to be affected by the above proposals and can also confirm that tied arrangements have never existed between ourselves and our brokers.
At present, the consultation is currently underway, and the above proposals may be subject to change. Once any eventual redress scheme commences, we can confirm that we will be ready to act quickly to identify and deal with all requirements of the scheme in an orderly and professional manner.
Claims Management Companies
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.
Please note that there is currently a pause for firms in the handling of commission related complaints which is currently in place until 4 December 2025, and the FCA consultation is proposing to extend this until 31 July 2026. This will give firms the time they need to complete the actions required under any redress scheme that is introduced.
Any complaint received about the payment of commission will be subject to the pause and therefore, unless instructed otherwise by the FCA, may not be responded to until the pause comes to an end.
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 published consultation on its proposals for a redress scheme. This will be intended to provide redress to motor finance customers who may have lost out due to unfair or excessive commission arrangements between motor dealers and lenders.
The scheme proposes to provide redress to customers where there was insufficient disclosure of a discretionary commission arrangement, a high level of commission (35% or more of the cost of credit and 10% or more of the amount of finance) or a tied arrangement between the lender and the broker.
Advantage Finance Ltd can confirm that discretionary commission arrangements and tied arrangements do not apply to any of its past business, and that an immaterial number of agreements would be regarded as having a high level of commission.
The consultation will run until November 2025 and, if a redress scheme goes ahead, the FCA intend it to commence in early 2026. The exact terms of any redress scheme may be different to the above proposals.
In the meantime, there remains in place a pause on the handling of commission complaints made to firms until 4 December 2025, which the FCA is currently proposing to extend until 31 July 2026.