Close Brothers Refund: Your Guide to Reclaiming Hidden Commission
Close Brothers Motor Finance, a major player in the UK car finance market, has been under scrutiny for its past use of Discretionary Commission Arrangements (DCAs). If you took out car finance with Close Brothers before January 28, 2021, you might be eligible for a refund. This paper explains what DCAs are, how they may have affected you, and how to claim a refund from Close Brothers.
What are Discretionary Commission Arrangements (DCAs)?
DCAs were a common practice in the car finance industry where dealerships or brokers had the flexibility to set the interest rate on your finance agreement. The higher the interest rate, the higher the commission they received from the lender (in this case, Close Brothers). This created a conflict of interest, as dealers were incentivized to mark up interest rates to maximize their own profit, potentially leaving customers paying more than they should have.
Why You Might Be Entitled to a Close Brothers Refund:
- Overcharged Interest: If a DCA was used in your car finance agreement, you might have been charged a higher interest rate than necessary, resulting in you paying more over the life of your loan.
- Lack of Transparency: DCAs were often not clearly explained to customers, meaning you might not have been fully aware of how the interest rate was determined or the commission the dealer received.
How to Claim a Close Brothers Refund:
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Gather Your Information:
- Finance Agreement: Locate your car finance agreement with Close Brothers. This document contains important details about your loan.
- Vehicle Details: Make, model, and registration number of the vehicle you financed.
- Dealership Information: Name and location of the dealership where you purchased the vehicle.
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Contact Close Brothers:
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Explain Your Complaint: Clearly state that you believe you were overcharged due to a DCA and provide all relevant information about your finance agreement.
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What to Expect:
- Acknowledgement: Close Brothers should acknowledge your complaint within 5 working days.
- Investigation: They will investigate your complaint, which may involve reviewing your finance agreement and contacting the dealership.
- Response: Due to the FCA's ongoing review of DCAs, Close Brothers may not provide a final response within the usual 8 weeks. The deadline for responding to DCA complaints has been extended to September 25, 2024.
- Outcome: Close Brothers will inform you of their decision and any redress they offer, which may include a refund of interest and charges.
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Escalating Your Complaint:
- Financial Ombudsman Service (FOS): If you're unhappy with Close Brothers' final response, you can escalate your complaint to the FOS: https://www.financial-ombudsman.org.uk/
- Time Limit: You have up to 6 months from the date of the final response letter to escalate your complaint to the FOS.
Important Notes:
- Be Patient: The complaint process may take time, especially with the FCA's ongoing review of DCAs.
- Keep Records: Keep copies of all correspondence with Close Brothers and the FOS.
- Seek Advice: If you're unsure about your rights or need support with your complaint, consider seeking advice from a consumer rights organization or a solicitor specializing in financial services.
References:
By understanding how DCAs work and following the steps outlined in this paper, you can increase your chances of receiving a refund from Close Brothers if you were unfairly charged due to this controversial practice.