Discretionary Commission Arrangements - Complaints and Refunds
Close Brothers Vehicle Finance has come under scrutiny due to customer complaints related to discretionary commission arrangements in vehicle finance. The Financial Conduct Authority (FCA) announced on January 11, 2024, that it would conduct a review of the vehicle finance market, focusing on the high number of customer complaints regarding discretionary commission arrangements, which were banned by the FCA in January 2021. This review is a market-wide endeavor affecting all providers of vehicle finance, including Close Brothers Vehicle Finance.
Discretionary commission arrangements involve payments made by finance companies to brokers or dealers based on the interest rate charged to the customer, potentially incentivizing higher rates to increase commissions. Customers who took out vehicle finance on a regulated agreement before January 28, 2021, may be eligible to make a complaint about such arrangements. Close Brothers Vehicle Finance has set up a process for customers to check their eligibility and file a complaint, including an online form for quick submission. The firm has committed to reviewing and acknowledging complaints within five working days and has paused responding to complaints about discretionary commissions until at least September 25, 2024, in line with the FCA's industry-wide review.
The potential financial impact of this scrutiny on UK auto lenders, including Close Brothers, is significant. The FCA's probe into commission arrangements could lead to auto lenders facing up to £13 billion in compensation payouts. This figure underscores the gravity of the issue and the potential financial consequences for the involved financial institutions.
For customers of Close Brothers Vehicle Finance or any other vehicle finance provider who believe they might have been affected by discretionary commission arrangements, it's important to review the details of their finance agreements, particularly if the agreements were entered into before January 28, 2021. Affected customers should consider utilizing the complaint processes set up by their finance providers and stay informed about the developments of the FCA's review and its outcomes, which could influence potential compensation or other remedial actions.