Many people across the UK are now checking whether they could be owed compensation for a mis-sold car finance agreement. Over the past few years, concerns have been raised about the way some car finance deals were arranged, particularly where dealers received commission that customers were not fully told about.
Research by the Financial Conduct Authority (FCA) found that 27% of car finance customers lack the confidence to make a complaint without using a claims management company (CMC) or a law firm. This highlights that while making a complaint yourself is free, many people feel they need extra support to understand the process and complete their claim.
With millions of car finance agreements taken out over the years, it is worth understanding your options before deciding how to make a complaint.
Why Are Car Finance Claims Being Made?
Many car finance complaints relate to commission arrangements between lenders and car dealers. In some cases, dealers were paid commission based on the interest rate charged to customers. This type of commission, often known as a discretionary commission arrangement, could have resulted in customers paying more than they otherwise would have.
The main issue is that many customers were unaware these commission payments existed when they agreed to their finance from car lenders such as Blackhorse, Close Brothers and Audi Financial Services. As a result, people are now asking lenders to review their agreements and determine whether they were treated fairly.
The FCA has estimated that millions of car finance agreements could potentially be affected by historic commission arrangements. This has made car finance one of the largest consumer finance issues seen in the UK in recent years.
Can You Make a Complaint Yourself?
Yes. Anyone can make a car finance complaint directly to the finance provider at no cost, whether it is Mercedes, BMW, Hyundai, Close Brothers or claims against Black Horse. You do not have to use a claims management company or solicitor if you do not want to.
Making a complaint yourself means you keep all of any compensation you receive if your claim is successful. However, you may need to gather documents, contact lenders, complete forms and respond to requests for more information during the process.
For some people, this is straightforward. Others may find the process time-consuming, particularly if they have had several finance agreements over the years or no longer have their paperwork.
The Pros of Using a Claims Management Company
A claims management company can take much of the administration away from you. They often help gather information, prepare your complaint and submit it to the lender on your behalf.
Many companies also keep track of FCA claim deadlines, communicate with the finance provider and update you throughout the process. This can give people greater confidence, especially if they are unsure where to begin.
For customers who have had multiple finance agreements or cannot easily find their documents, professional support may help simplify what can otherwise feel like a complicated process.
The Cons of Using a Claims Management Company
The biggest disadvantage is the cost. Claims management companies usually charge a fee if your claim is successful. This is often a percentage of the compensation awarded of typically 20%, but sometimes as much as 30% depending on the company and size of the claim - meaning you will not receive the full amount.
It is important to read the company's terms and conditions carefully before signing any agreement. You should understand exactly how much they charge, when the fee becomes payable and whether any additional costs may apply.
It is also worth remembering that using a claims management company does not guarantee a successful outcome. Each claim is assessed on its own merits by the finance provider.
Who Could Be Eligible?
The eligibility to make a car finance claim includes:
- You bought a car using finance in the UK.
- Your agreement was taken out between 6 April 2007 and 1 November 2024.
- The vehicle was either new or second-hand.
- You no longer own the vehicle but previously had a qualifying finance agreement.
- You were not told about commission arrangements linked to your finance agreement.
- You are making a claim on behalf of someone who has died, where you are authorised to act for their estate.
Meeting one or more of these points does not automatically mean compensation will be awarded, but it may be worth asking your lender to review your agreement.
Choosing the Right Option
There is no right or wrong choice when deciding how to make a car finance complaint. Some people are happy to deal directly with the lender and manage the process themselves for free.
Others prefer the reassurance of having a claims management company guide them through each stage, even if this means paying a fee if the claim succeeds.
The FCA's findings shows that many people value additional support. Whether you decide to make the complaint yourself or use a claims management company, the most important step is checking whether your agreement could be eligible.
If you had a car on finance during the qualifying period, taking a few minutes to review your options could help you decide the best way to move forward.
