A discretionary commission arrangement (DCA) is when a lender allows a broker to set interest rates. The higher the rate, the more commission the broker earns, creating a conflict of interest. If you were mis-sold car finance due to this, you may be entitled to compensation.
How Do I Know If I Have a Claim?
Car finance deals between 2007 and 2021 may include discretionary commission arrangements. If your broker didn’t explain how they set your interest rate, you could have been overcharged. The Financial Conduct Authority (FCA) is investigating unfair agreements and expects lenders to refund affected customers. Many drivers affected by the car finance scandal update are now coming forward to seek compensation.
How Much Compensation Could I Get?
Compensation depends on the interest you overpaid due to the broker’s commission incentives. In some cases, claimants have received refunds ranging from £1,000 to £10,000. The final amount varies based on loan size, interest rate, and duration.
How Do I Calculate My Potential Refund?
Start by checking your original finance agreement for details about interest rates and broker commissions. Compare your rate with standard rates offered by the lender at the time. If your interest rate was inflated due to a commission-based decision, you may be owed compensation.
What Are the FCA’s Findings on Discretionary Commission?
The FCA found that some brokers manipulated interest rates to increase their commission. This unfair practice led borrowers to pay significantly more than necessary. The FCA has instructed lenders to assess complaints fairly and issue refunds where applicable. If you had a personal contract purchase (PCP) agreement, you may also be eligible for pcp claims if your finance deal was mis-sold under similar conditions.
Do I Need a Claims Management Company?
You don’t need a claims management company to file a complaint. You can contact your lender directly and ask for a refund if you were mis-sold finance. Using a claims company could result in them taking a percentage of your payout as fees.
How Long Will It Take to Get My Compensation?
The process can take several months, depending on lender response times and FCA regulations. If your lender refuses to compensate you, you can escalate your complaint to the Financial Ombudsman Service (FOS). The FOS will review your case independently and decide if you deserve compensation.
Steps to Take Now
- Check your finance agreement for discretionary commission details.
- Compare your interest rate with market rates from the same period.
- Contact your lender to file a complaint and request a refund.
- If rejected, escalate the complaint to the Financial Ombudsman Service.
- Keep records of all communication and evidence supporting your claim.
Conclusion
Discretionary commission arrangements led to millions of customers overpaying on car finance. If you suspect you were affected, act now to claim your money back. The sooner you file your complaint, the faster you can receive compensation.
