Good to know: We are a Claims Management Company (CMC). You do not need to use a CMC to make your complaint to your lender, bank or insurer. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free if the firm is still trading. For eligible failed firms, you can refer a claim to the Financial Services Compensation Scheme for free.
You may be entitled to claim from Close Brothers Finance if you were not properly informed about commission arrangements on your car finance agreement. Close Brothers 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 Close Brothers, you may be entitled to compensation.
Close Brothers 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: Close Brothers 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.
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.
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 Close Brothers between April 2007 and January 2021, and the finance agreement involved hidden commission arrangements.
Your Close Brothers finance agreement may have been mis-sold if:
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.
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.
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.
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.
Claims can be made for various types of Close Brothers finance agreements:
The amount of compensation depends on several factors:
Close Brothers 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.
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 Close Brothers 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.
If you believe you may have been mis sold car finance by undisclosed commission arrangements from Close Brothers 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 Close Brothers on your behalf. Reclaim your money with Allegiant.
Sources:
Mis-selling refers to situations where a customer was not given all the important facts before being sold a product or service, or did not give their full, informed consent to proceed. Key indicators include a lack of transparency about commissions paid to dealers, inadequate explanation of finance terms and conditions, or the presence of a discretionary commission arrangement (DCA) within a finance agreement. In such cases, the dealership could have increased the interest rate on the loan, at the customer’s expense, without their knowledge or consent
Yes. The Financial Conduct Authority (FCA) banned discretionary commission arrangements (DCAs) from January 28, 2021. Before this ban, DCAs were widespread and often used without customers’ full knowledge or consent. The ban was introduced because these arrangements incentivised brokers to increase interest rates for their own benefit, often at the expense of the customer
Probably. It is estimated that around 95% of car finance deals included some form of commission. This could be a discretionary commission arrangement (DCA) or another type of commission. The exact nature and amount of commission were rarely disclosed to customers
Close Brothers may have mis-sold finance agreements by failing to provide adequate information about the risks and true costs involved. This includes not explaining the implications of a discretionary commission arrangement (DCA), which could result in customers unknowingly paying higher interest so that the dealership could earn more commission. Some customers, facing these extra costs, may have struggled with repayments and risked having their car repossessed
Customers are often unaware of the amount of any commission, as it is rarely included in the credit agreement. This commission is typically a hidden payment between the lender and the dealership, but it can result in the customer paying more overall. Additionally, many customers are surprised by the size of the ‘balloon payment’ at the end of a car finance agreement, which is much larger than the monthly instalments and must be paid to own the vehicle outright
The Court of Appeal ruling in October 2024 broadened the scope of mis-selling investigations. Previously, concerns focused mainly on discretionary commission arrangements (DCAs), but the Court ruled that other types of undisclosed commissions could also be unfair to customers. This means customers may be entitled to compensation if they were not properly informed about commissions, not just in DCA cases. The Supreme Court is expected to make a final ruling in summer 2025, following appeals from car finance providers like Close Brothers
It is currently difficult to give a definitive success rate for these claims, as many are on hold pending regulatory and legal decisions. The Financial Ombudsman Service has upheld complaints in favour of customers where DCAs were involved. However, the FCA has paused these claims while the full extent of the mis-selling is determined. Once the pause is lifted, it is widely expected that many customers will receive compensation
Good to know: We are a Claims Management Company (CMC). You do not need to use a CMC to make your complaint to your lender, bank or insurer. If your complaint is not successful you can refer it to the Financial Ombudsman Service yourself for free if the firm is still trading. For eligible failed firms, you can refer a claim to the Financial Services Compensation Scheme for free.
