Important Update
On 24 September 2024 the FCA announced an extension to the temporary changes to handling rules for motor finance complaints.
The FCA are now planning to announce the findings of their investigation and next steps in May 2025. This will give the time needed to assess whether the FCA should allow firms to handle complaints in the usual way or introduce a different approach.
Whilst the FCA are investigating, they are extending the deadline that providers have to respond to Discretionary Commission Arrangement complaints to after 4 December 2025.
Discretionary Commission Arrangement Complaints
On 11 January 2024 the Financial Conduct Authority (FCA) made an announcement that it would be looking into customer complaints relating to discretionary commission arrangements prior to the FCA’s ban on discretionary models in 2021.
The FCA are reviewing arrangements up to 27 January 2021 and will apply to customers who took out a credit agreement during this time (such as Hire Purchase, Lease Purchase or Solutions Personal Contract Plan) and where a discretionary commission arrangement was in place with the retailer.
Customers who took a credit agreement after 27 January 2021 and customers who had a hire agreement, are out of scope.
Whilst the FCA carries out its review it has paused the 8 week deadline for motor finance firms to provide a final response on discretionary commission complaints. If you have raised a complaint with us regarding a discretionary commission arrangement since 17 November 2023 you can expect to receive a final response from us after this pause (i.e. after 4 December 2025).
This change means the usual 8 weeks given to respond to complaints is paused where we identify that the commission model used was a discretionary commission arrangement. This means you can still complain to us, but we will not have to respond to your complaint until after 4 December 2025.
Customers who have already made a discretionary commission complaint to us, and received a final response during the period 12 July 2023 to 29 April 2025, will now have until 29 July 2026 to refer their complaint to the Financial Ombudsman Service.
For further information on the FCAs work in this area, please visit their website.
What is a discretionary commission?
Before January 2021, some lenders allowed brokers (the person that arranges the loan, for example, your retailer) to adjust the interest rates they offered for car finance.
Typically, the amount of commission earned by a broker was determined by the interest rate that the agreement had been contracted at - the lower the interest rate, the lower the commission the broker received, and vice versa. This was known as a discretionary commission arrangement. Since January 2021, this commission model is no longer allowed.
Which customers could this apply to?
· You used car finance to buy a car before 28 January 2021, using either Solutions Personal Contract Plan (PCP), Hire Purchase or Lease Purchase
· Volkswagen Financial Services and your retailer had a discretionary commission arrangement
This doesn’t apply if:
· Your finance agreement had a 0% APR
· You used car finance to buy a car on or after 28 January 2021
· You used a hire agreement, such as a Contract Hire or Finance Lease
If this doesn’t apply to you, then our standard complaints procedure will apply.
How do I contact you about a Discretionary Commission Arrangement?
If your enquiry relates to motor commission and you would like to establish if a discretionary commission arrangement applied to your agreement, please complete the enquiry form by clicking on the link below.
For more information, please see our customer concern policy