Motor Finance Whistleblower Exposes Widespread Mis-Selling

The Motor finance mis-selling scandal took a new twist in an exposé aired by ITV News, a former car dealership salesperson has lifted the lid on unethical commission-based practices within the motor finance industry. The whistleblower’s testimony aligns with what Your Money Claim and other consumer advocates have suspected for years: a widespread mis-selling scandal that could and should lead to substantial compensation claims.

The regulator has long had concerns about discretionary commission arrangements (DCAs). These revelations suggest that all commission-based car finance agreements may have been tainted by a lack of transparency and fairness, meaning consumers across multiple finance models should be owed compensation.

The Widespread Nature of Undisclosed Commissions

Between 95% and 99% of all motor finance agreements since 2007 involved a commission paid by the finance provider to the dealership. This staggering statistic underscores the scale of the issue. Nearly every customer who financed a vehicle in the past two decades may have unknowingly paid inflated interest rates.

Legal Confirmation: Court of Appeal Judgment

On 25th October 2024, the Court of Appeal ruled that non-disclosure of the amount of commission payments to be unlawful. If the Supreme Court agrees with the unanimous verdict of the Court of Appeal it would confirm that millions of customers have been mis-sold their finance agreements and would be eligible for compensation.

Types of Motor Finance Commission Models Affected

• Discretionary Commission Arrangements (DCAs) – Banned in 2021 but widespread before then. Dealerships earned more by increasing interest rates.
• Fixed Commission Models – Usually linked to the interest rate charged, or total amount borrowed.
• Volume Performance-Based Commission – Encouraged dealers to hit targets with certain finance providers and products.

What This Means for Consumers

The whistleblower’s revelations confirm that millions of UK consumers may have been unfairly charged due to undisclosed commission payments. If you took out a Personal Contract Purchase (PCP) or Hire Purchase (HP) between April 2007 and October 2024, there is a high probability that you overpaid due to these hidden costs.

Conclusion: The Potential for Compensation

Millions of UK consumers could be owed significant refunds. The government has attempted to intervene to protect the finance industry in the upcoming Supreme Court case, which is a scandal in itself. The Supreme Court will ultimately decide on matters, and we trust that it will not bow down to external pressures from the industry that has a history of mis-selling.