FCA's Latest Update on Motor Finance Commissions: What It Means for PCP and Car Finance Claims

Understanding the FCA's Commitment to Consumer Protection

On 17 January 2025, the Financial Conduct Authority (FCA) released a letter from its Chief Executive, Nikhil Rathi, to Lord Forsyth. This letter highlights critical developments in motor finance commission rules and their enforcement.

With the 2021 ban on discretionary commission arrangements (DCAs) and strict disclosure obligations under CONC (Consumer Credit sourcebook), the FCA has reinforced its commitment to transparency and consumer protection.

The FCA's acknowledgment of the ongoing Johnson v FirstRand Bank Ltd case, which is under Supreme Court review, underscores the evolving legal landscape for PCP claims and car finance claims.

Key Takeaways from the FCA's Letter

2021 Ban on DCAs

Discretionary commission arrangements, which allowed brokers to set their commission rates, were prohibited. This ensures brokers no longer benefit at the expense of consumers.

Commission Disclosure Rules under CONC

Brokers and lenders must clearly disclose any commissions that could influence their recommendations. Failure to do so can create an unfair financial relationship, which is central to many PCP and car finance claims.

Reference to the Johnson Case

The FCA has stated its intention to review its rules following the Supreme Court's final judgment in the Johnson case. This case has already influenced the interpretation of hidden commissions and unfair financial relationships.

How This Impacts PCP and Car Finance Claims

For consumers, the FCA's enforcement of stricter rules means:

• **Greater Transparency** — consumers are entitled to know if brokers received commissions and how these impacted their finance agreements.
• **Opportunities for Compensation** — if brokers or lenders failed to disclose commissions, agreements could be challenged as unfair, potentially leading to compensation.

This is particularly significant for PCP claims, as many Personal Contract Purchase agreements involve undisclosed commissions.

What Should You Do If You Suspect Mis-Selling?

If you believe your PCP agreement or car finance deal was mis-sold:

1. Review Your Agreement — check for any mention of commissions or lack thereof. 2. Gather Evidence — keep records of communications with brokers or lenders. 3. Contact Sentinel Legal — our team specialises in challenging unfair agreements and securing compensation.