New research reveals that 65% of car finance customers who took out loans before the ban on discretionary commission arrangements (DCAs) trusted their dealer to offer them the best deal – with many being unaware of hidden commissions.
The Financial Conduct Authority (FCA) launched an investigation last year into DCAs on car loans issued between 2007 and 2021.
Consumer champion Consumer Voice surveyed 2,042 individuals who secured car finance before 28 January 2021 and found out that only 21% knew their dealer could be receiving commission, while 64% believed the dealer was only profiting from the sale of the vehicle.
New research reveals that 65% of car finance customers who took out loans before the ban on discretionary commission arrangements (DCAs) trusted their dealer to offer them the best deal – with many being unaware of hidden commissions.
The Financial Conduct Authority (FCA) launched an investigation last year into DCAs on car loans issued between 2007 and 2021.
Consumer champion Consumer Voice surveyed 2,042 individuals who secured car finance before 28 January 2021 and found out that only 21% knew their dealer could be receiving commission, while 64% believed the dealer was only profiting from the sale of the vehicle.
More than half (56%) assumed their loan interest rate was based solely on their credit history.
A Court of Appeal ruling in October increased the likelihood of motor finance firms facing widespread liability for undisclosed ‘secret’ commissions.
However, lenders Close Brothers and MotoNovo owner FirstRand have challenged the ruling, with the Supreme Court set to hear their appeal from April 1-3. A decision on a potential compensation scheme is expected within six weeks of the Supreme Court’s final ruling.
The FCA and the National Franchised Dealers Association (NFDA) have been granted permission to intervene in the case.
Alex Neill, co-founder of Consumer Voice, said the regulator has given its strongest signal to date that compensation is owed on a widespread scale to UK motorists when it announced it wanted to provide as much certainty as possible to firms, consumers and industry stakeholders to signpost the next steps as part of its review.
“However, key questions remain, including whether all secret commission deals will be included and what level of compensation will be provided.”
With the Supreme Court decision poised to shape future redress, Neill urged consumers uncertain about commission charges on their car loans to contact their lender and lodge a complaint.
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