What is mis-sold motor finance?
Millions of UK drivers financed a vehicle through a dealer or broker without ever being told how the salesperson was paid. Here's what that means — and why regulators are stepping in.
The short version
‘Mis-sold’ motor finance describes agreements where the driver was not given a fair, clear picture of the deal — most commonly because the dealer or broker was quietly earning commission tied to the interest rate you paid.
The commission problem
For many agreements taken out before November 2024, dealers and brokers could increase the interest rate you were charged and receive a larger commission for doing so. This is known as a Discretionary Commission Arrangement (DCA). The FCA banned DCAs in 2021 and is now overseeing a redress process for older agreements.
Other issues that can count
- Pressure or rushed sales that didn't leave time to compare options
- Fees and charges that weren't clearly explained upfront
- Affordability checks that weren't properly carried out
- Products bundled in (like GAP insurance) that were poorly explained
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