If you signed a motor finance agreement (PCP, hire purchase, personal contract hire) on or after 1st January 2003, and the costs and charges weren’t fully explained to you, you may be entitled to make a claim for mis-sold motor finance.

Finance providers are required by law to ensure that any commission payment is clearly explained to customers.  However, many customers who used finance to purchase their vehicles were not told that commission would be charged as part of the finance agreement or weren’t told how much commission would be charged.

In March 2019, the Financial Conduct Authority published a report on motor finance which found that:


  • Most motor finance agreements allowed the person who was arranging finance (normally the motor dealer who sold you the vehicle, but sometimes an independent financial agent) to be paid commission (95% of a sample of around 1,000 finance agreements).

  • Only a small number of motor dealers disclosed to customers that they may receive a commission for arranging finance.

  • When information about commission was provided by motor dealers, it was not always complete, clear, or easy to understand.

  • Many finance agreements had a commission model which linked the motor dealer’s commission to the customer interest rate and allowed them to set the interest rate.  This created an incentive for motor dealers to charge a higher interest rate.

  • Commission models which allow the motor dealer to set the interest rate could be costing customers an additional £300m annually in interest.


Why does this matter?

  • When offering a finance product, the motor dealer must pay due regard to the customer’s needs and circumstances and ensure that the finance offered is suitable for that customer.

  • Motor dealers must disclose the existence of commission, and clearly explain the model of commission so that customers can make informed decisions about whether a finance product is right for them.

  • Motor dealers must disclose if the commission model may affect their impartiality in promoting a particular finance product or impact the customer’s decision making.

  • Commission models which allow the motor dealer to set the commission may lead to customers being charged higher interest rates than would otherwise be the case or being offered finance which is unsuitable or unaffordable.


How much compensation can I claim?

This will depend on a number of factors such as:

• The type of finance product

• The commission model

• The interest rate

• The size of the loan

• The length of the finance agreement


It is estimated that on a typical 4-year motor finance agreement of £10,000, higher commission could result in the customer paying around £1,100 more in interest charges over the term of the agreement – a 50% increase in interest costs.


How do I claim?

Register your claim on our claim portal: https://portal.lefevresclaims.co.uk/form/yAgxdUMNfQn4VYcv9rfY

Email: motorfinanceclaims@lefevres.law

Speak to a member of our team: 0131 226 5408


We work on a no win, no fee basis.  If your claim is not successful, you do not have to pay us anything.  Our full terms of engagement are available to view on the claim portal.