Car finance complaints

Some car finance customers may have been charged too much on their loans. Find out what to do if you think this affects you.

First published: 11/01/2024 Last updated: 21/03/2024 See all updates

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Before January 2021, some lenders allowed brokers (the person that arranges the loan, for example, your car dealer) to adjust the interest rates they offered customers for car finance.

Typically, the higher the interest rate, the more commission the broker received. This was known as a discretionary commission arrangement.

Discretionary commission arrangements created an incentive for brokers to increase how much people were charged for their car loan.

We banned this practice in 2021. But there have since been a high number of complaints from customers about how much they were charged before the ban. Providers (lenders and brokers) are rejecting most of these complaints, because they believe they haven’t acted unfairly and haven’t caused customers to lose out.

We’re assessing the extent of the problem to make sure that, if you're owed compensation, you get it in the best way possible.

If you think this may affect you, find out below what your next steps should be.

Who this applies to

This applies to you if:

  • you used car finance to buy a motor vehicle, for example a car, van, campervan or motorbike, before 28 January 2021 (this includes hire purchase agreements, such as Personal Contract Purchases), and
  • your lender and broker used a discretionary commission arrangement 

You can check with your provider if they used a discretionary commission arrangement. 

If you’re not sure who your provider was, but the agreement was active in the last 6 years, you can try checking your credit file as your provider may be listed on there. Find out how to access your credit file for free from the Information Commissioner’s Office.

This doesn’t apply to you if: 

  • you used car finance to buy a car on or after 28 January 2021, or 
  • you used a hire agreement, such as a Personal Contract Hire

If this doesn’t apply to you, but you have a complaint about another issue, find out how to complain.

What we’re doing

Pausing the complaints process

We’re examining the issue to make sure that, if you're owed compensation, you get it in the best way possible. In the meantime, we're pausing the 8-week deadline for providers to respond to complaints about car finance involving this type of commission. You can still complain to your provider, but they will not have to respond to your complaint until after 25 September 2024, at the earliest.

It’s important that any complaints are dealt with by providers in a consistent, efficient and orderly way. Given the high number of possible complaints, there’s a risk this might not happen.

Managing this risk is important because this borrowing isn’t covered by the Financial Services Compensation Scheme. This means if complaints aren't dealt with in an orderly way and your provider goes out of business, you may not get the money you’re owed.

Giving you longer to refer your complaint

If you're unhappy with a response you've had from your provider to this type of complaint, we’re giving you longer to take your complaint to the Financial Ombudsman Service. 

Usually, you have to take your complaint to the Financial Ombudsman within 6 months of getting a final response from your provider, but we’re extending this by up to 15 months if you were sent a final response between 12 July 2023 and 20 November 2024.

Making a complaint

Find out what your next steps should be if you think you could be owed compensation.

Have you complained yet?

Click the buttons below for step-by-step information on how to make a complaint, or what to do once you've made a complaint.

Once we have more information, we’ll decide the best way to get compensation to people who’ve lost out. You may want to wait for us to finish this work before you complain.

But it’s still important that you complain within the time limit.

Step 1: Check if you’re eligible to complain

Check that your provider used a discretionary commission arrangement.

Step 2: Complain within the time limit

Generally, you need to complain to your provider within 6 years of the problem happening. Or, if later, within 3 years from when you should have become aware that you had cause to complain. So, if you think you could be running out of time, you should consider complaining to your provider now.

You can complain to either your broker (for example, your car dealer) or the lender (the firm providing the finance).

Step 3: Getting a response from your provider 

Once you've made a complaint, your provider will have until 20 November 2024 to respond (unless we extend this deadline). If you're unhappy with their response, or you don't hear from them by this date, you can then complain to the Financial Ombudsman Service.

Taking your complaint to the Financial Ombudsman

It’s important you contact the Financial Ombudsman by the date given in your provider's final response letter, or they may not be able to help.

How did you complain?

Before the Financial Ombudsman Service can consider your complaint, you'll need to complain to your provider.

Generally, you need to complain to your provider within 6 years of the problem happening or, if later, within 3 years of you becoming aware that you had cause to complain. If you make your complaint now, your provider will have until 20 November 2024 to respond (unless we extend this deadline).

If you're not happy with their response, or you don't hear from them by this date, you can then complain to the Financial Ombudsman Service.

Claims management companies (CMCs) are aware of the time limits that apply depending on the stage of your complaint. Your CMC should keep you up to date on the progress of your complaint.

Contact your CMC if you want more information.

When did you complain?

Have you had a response from your provider?

You may have had a written response or a final response.

A written response will explain why your provider can't give you a final response. It should also indicate when it expects to be able to do so.

A final response will either offer you compensation, a remedy to your complaint, or it will reject the complaint and give you reasons for doing so.

You can now take your complaint to the Financial Ombudsman Service. However, you may choose to wait to give your provider more time to respond.

Your provider should have acknowledged your complaint and sent you a written response. In this, it should have:

  • explained why it hasn't given you a final response
  • indicated when it expects to be able to do so

If you haven't heard from your provider, you should get in touch with it to check that it's received your complaint.

If your provider sends you a final response and you want to go to the Financial Ombudsman Service, you should do so by the date given in the final response letter.

Have you taken your complaint to the Financial Ombudsman Service?

If you have any questions about your complaint you should contact your investigator at the Financial Ombudsman Service.

If you're unhappy with your provider's response, you can complain to the Financial Ombudsman Service.

It’s important you contact the Financial Ombudsman Service by the date given in the final response, unless your provider contacts you to say you have more time.

You should think carefully before accepting any offer from your provider. If you accept an offer in full, you won't be able to take the same complaint to the Financial Ombudsman Service or pursue the case in court.

But if your provider has offered you compensation, taking your complaint to the Financial Ombudsman Service doesn't necessarily mean you'll get a better result.

Have you taken your complaint to the Financial Ombudsman Service?

If you have any questions about your complaint you should contact your investigator at the Financial Ombudsman Service.

You can now take your complaint to the Financial Ombudsman Service. However, you may choose to wait to give your provider more time to respond.

If you wait for your provider, but you're unhappy with their final response, you'll need to complain to the Financial Ombudsman Service by the date given in the final response letter.

Have you had a response from your provider?

You may have had a written response or a final response.

A written response will explain why your provider can't give you a final response. It should also indicate when it expects to be able to do so.

A final response will either offer you compensation, a remedy to your complaint, or it will reject the complaint and give you reasons for doing so.

Your provider should have acknowledged your complaint. If it hasn't, you should get in touch to check it's received your complaint.

Normally, your provider would have 8 weeks to respond to your complaint. But we're pausing this process.

This means that if you complained on 28 December 2023 (2 weeks before the pause started on 11 January 2024), your provider will then have 6 weeks to get back to you after the pause ends on 25 September 2024 (unless we extend this deadline).

If you're not happy with their response, you can then complain to the Financial Ombudsman Service.

It’s important you contact the Financial Ombudsman Service by the date given in the final response from your provider, or they may not be able to help.

Have you taken your complaint to the Financial Ombudsman Service?

If you have any questions about your complaint you should contact your investigator at the Financial Ombudsman Service.

If you're unhappy with your provider's response, you can complain to the Financial Ombudsman Service.

It’s important you contact the Financial Ombudsman Service within 15 months of being sent a final response from your provider, or they may not be able to help.

You should think carefully before accepting any offer from your provider. If you accept an offer in full, you won't be able to take the same complaint to the Financial Ombudsman Service or pursue the case in court.

But if your provider has offered you compensation, taking your complaint to the Financial Ombudsman Service doesn't necessarily mean you'll get a better result.

Have you taken your complaint to the Financial Ombudsman Service?

If you have any questions about your complaint you should contact your investigator at the Financial Ombudsman Service.

Although you can now take your complaint to the Financial Ombudsman Service, you may want to wait and give your provider more time to issue a final response.

If you're unhappy with their response, you can then complain to the Financial Ombudsman Service.

It’s important you contact the Financial Ombudsman by the date given in the final response from your provider, or they may not be able to help.

Have you had a response from your provider?

Your provider should have acknowledged your complaint. If it hasn't, you should get in touch to check it's received your complaint.

Your provider has until 20 November 2024 to respond to your complaint (unless we extend this deadline).

If you're unhappy with their response, or they don't respond by this date, you can then complain to the Financial Ombudsman Service.

It’s important you contact the Financial Ombudsman Service by the date given in the final response from your provider, or they may not be able to help.

Have you taken your complaint to the Financial Ombudsman Service? 

If you have any questions about your complaint you should contact your investigator at the Financial Ombudsman Service.

If you're unhappy with your provider's response, you can complain to the Financial Ombudsman Service.

It’s important you contact the Financial Ombudsman Service within 15 months of being sent a final response from your provider, or they may not be able to help.

You should think carefully before accepting any offer from your provider. If you accept an offer in full, you won't be able to take the same complaint to the Financial Ombudsman Service or pursue the case in court.

But if your provider has offered you compensation, taking your complaint to the Financial Ombudsman Service doesn't necessarily mean you'll get a better result.

If you’d like to receive an update on our work involving car finance complaints and what it means for you, sign up for email updates.

Help making a complaint

It’s free and simple to complain to your provider and the Financial Ombudsman if you’re unhappy with a financial product or service. The Financial Ombudsman has information about car finance complaints, and if you’re concerned about the process, you can get free guidance from MoneyHelper.

A claims management company (CMC) can make a complaint for you, but you’ll have to pay a fee.

If you're thinking about using a CMC, or another type of claims management service, find out what to expect.

Protect yourself from scams

Beware of scammers pretending to be from the FCA. We’d never ask you to transfer money to us and we’d never ask for your bank account PINs and passwords.

Find out about how to spot fake FCA communications, and some of the common tactics scammers use.

Page updates

: Editorial amendment Initial instructions added to the decision tree.
: Link changed Broken link to 'next steps' fixed.
: Editorial amendment Steps added to decision tree, and information on scams and checking credit file.
: Information added motor vehicle examples
: Link added to email updates.


Source URL: https://www.fca.org.uk/consumers/car-finance-complaints

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