Black Horse Finance - Claim Compensation for Undisclosed Commission Arrangements

What is a Black Horse Car Finance Claim?

You may be entitled to claim from Black Horse Finance if you were not properly informed about commission arrangements on your car finance agreement. Black Horse Finance operates as a motor finance provider in the UK market and has been involved in landmark court cases regarding commission disclosure.

Following the Court of Appeal ruling on 25 October 2024, it is now established that dealers receiving commission from lenders without first telling customers and getting their informed consent was against the law. These type of deals are classed as mis sold car finance. If you were not told about commissions being paid to your dealer by Black Horse, you may be entitled to compensation.

Understanding Black Horse’s Commission Structure

Black Horse is a UK-based finance provider that partners with car dealerships and brokers to offer consumer car finance. Their business model typically relied on:

• Introducer Commissions: Black Horse paid commissions to car dealerships or brokers when they introduce a customer who takes out a car finance agreement.

• Discretionary Commission Arrangements (DCAs): Historically, the dealer or broker often had discretion to adjust the interest rate offered to the customer. The higher the rate, the higher the commission they received.

Understanding Discretionary Commission Arrangements (DCAs) vs Non-Discretionary Arrangements

How Discretionary Commission Arrangements (DCAs) Work

A Discretionary Commission Arrangement (DCA) was a type of commission model widely used in the UK motor finance industry before being banned in January 2021. Under a DCA, car dealers or finance brokers had the power to adjust the interest rate offered to customers on car finance agreements. The key feature was that the higher the interest rate set by the dealer or broker (within limits set by the lender), the more commission they would earn from the finance company.

This created a conflict of interest where dealers and brokers were incentivised to increase the interest rate as much as possible, maximising their own commission at the expense of the customer, who would end up paying more for their car finance than necessary. Customers were rarely made aware of this arrangement, and the structure was often not disclosed transparently.

For example, if a lender’s base rate for a customer was 5%, but the dealer could set the rate up to 8%, the dealer might choose 8% to earn a larger commission. The customer, unaware of the dealer’s discretion, could pay thousands more over the life of the loan.

How Non-Discretionary Commission Arrangements Differ

A Non-Discretionary Commission Arrangement is fundamentally different. Here, the commission paid to the dealer or broker is fixed—either as a flat fee or as a set percentage of the loan amount. The dealer or broker has no power to alter the interest rate offered to the customer.

In these arrangements, the customer’s interest rate is determined solely by the lender, based on factors like creditworthiness and loan terms, and not by the dealer or broker. The commission the dealer receives does not increase if the customer pays a higher interest rate.

You may be able to claim compensation if you purchased a car, van, or motorcycle through Personal Contract Purchase (PCP) or Hire Purchase (HP) finance arranged by Black Horse between April 2007 and January 2021, and the finance agreement involved hidden commission arrangements.

Your Black Horse finance agreement may have been mis-sold if:

• The dealership did not inform you they would receive a commission from Black Horse for setting up your finance agreement
• You were not informed of all available finance options, including the differences and responsibilities of each type of product
• Interest rates were not transparently explained or you were not offered the best available rate
• The dealership did not adequately explain the details of the financial agreement, including Terms and Conditions
• High-pressure sales tactics were used or you were not given adequate time to consider the agreement

Legal Developments and Court Rulings

On 25 October 2024, the Court of Appeal ruled on car finance cases, deciding it was against the law for dealers to receive commission from lenders without first telling customers about the commission and getting their informed consent. This landmark ruling sent shockwaves through the industry and caught the attention of prominent consumer champions and journalists like Martin Lewis. Getting informed consent depends on the facts of each case but includes telling the customer about the amount of commission and how it was calculated.

The lenders involved are appealing the decision to the Supreme Court, but unless the Supreme Court overturns the decision, this is now law which car finance providers must follow.

Current Status and Response Times

The Financial Conduct Authority (FCA) has given providers until after 4 December 2025 before they have to start responding to any type of car finance commission complaint. This means Black Horse has until after 4 December 2025 to respond to complaints about commission arrangements.

The FCA says it is managing complaints in a consistent and orderly way due to the high number of possible complaints. They’ve indicated that once the Supreme Court decision is made, if customers have lost out, they will report on what action they will take next.

Case Study: Hopcroft v Close Brothers Limited

Close Brothers Limited was one of the key defendants in the landmark Court of Appeal case alongside MotoNovo. The case established that car sales firms couldn’t lawfully receive commission from finance firms unless they had the customer’s “fully informed consent”. This ruling has significant implications for Close Brothers customers who were not properly informed about commission arrangements.

The case demonstrates that customers who had commission of any type on their Close Brothers car finance agreement could potentially be owed money back, as the court ruled that proper disclosure of commission details, including the amount, was required for the agreement to be lawful.

Regulatory Review and Current Status

The Financial Conduct Authority (FCA) is conducting a comprehensive review of historic commission arrangements in motor finance. The FCA has paused the handling of complaints relating to both discretionary and non-discretionary commission arrangements until after December 2025, pending the outcome of Supreme Court proceedings.

However, you can start your claim with Allegiant today.

Types of Finance Agreements Covered

Claims can be made for various types of Black Horse finance agreements:

• Personal Contract Purchase (PCP) agreements
• Hire Purchase (HP) agreements
• Finance for cars, vans, trucks, and motorcycles
• Both new and second-hand vehicles purchased through finance
• Agreements that are still active with ongoing payments
• Agreements that have ended and been fully paid off
• Multiple vehicle agreements
• Cases where the vehicle was repossessed

How Much Could You Claim from Your Car Finance Agreement?

The amount of compensation depends on several factors:

• The size of the loan taken out with Black Horse – generally, larger loans result in higher compensation
• The length of the agreement – longer payment periods typically result in higher compensation
• The commission arrangements and interest rates involved
• Additional compensatory interest may be awarded

Black Horse customers may be entitled to significant compensation amounts based on the commission arrangements that were not properly disclosed in their car finance agreements. The substantial commission payments demonstrate the significant amounts that may be recoverable in car finance claims and PCP claims.

Why Choose Allegiant for Your Car Finance Claim?

Allegiant has won over £1.4 Million in compensation payouts for Car Finance claims. As a specialist claims management company, we understand the complexities of motor finance claims and have the expertise to investigate and pursue PCP claims and car finance claims against major lenders like Black Horse effectively.

No Upfront Fees Guarantee – We guarantee no upfront fees for our car finance claim service. Any fee is only due to Allegiant if we successfully win you cash in the bank from your claim. This means you’re at no financial risk when making a claim with us.

Our track record demonstrates our commitment to securing fair compensation for clients who have been affected by undisclosed commission arrangements in their car finance agreements.

Our Car Finance Claims Process

1. Free Claim Check – We review your Black Horse finance agreement details at no cost to determine if you may have a valid car finance claim
2. Investigation – Our experts investigate the commission arrangements and gather evidence to support your PCP claim or car finance claim
3. Claim Submission – We submit your claim to Black Horse on your behalf and handle all correspondence
4. Compensation – If successful, you receive your compensation payment once the claim is resolved

Next Steps

If you believe you may have been mis sold car finance by undisclosed commission arrangements from Black Horse Finance, contact Allegiant today. As a specialist claims management company, we can investigate your PCP agreement or car finance agreement and submit a claim to Black Horse on your behalf. Reclaim your money with Allegiant.

Sources:

• Court of Appeal ruling: Johnson v FirstRand Bank Limited t/a MotoNovo Finance and Hopcroft v Close Brothers Limited [2024] EWCA Civ 1203
• Available at: https://www.judiciary.uk/wp-content/uploads/2024/10/Johnson-v-Firstrand-Bank-and-Hopcroft-v-Close-Brothers.pdf
• Black Horse Finance customer information and industry reports