Discretionary Commission Arrangements - Complaints and Refunds

You do not need to use a Claims Management Company. You can make the claim directly to the lender and if they reject your complaint you can take it to the Financial Ombudsman Service free of charge, but you must do this within 6 months of the lenders Final Decision Letter.

MotoNovo Finance

MotoNovo Finance, established in 1972 and headquartered in Cardiff, Wales, stands as a pivotal entity in the car financing domain, extending its services to vans and motorcycles alongside dealer finance. This private company operates under the broader spectrum of financial services, auto loans, and financial management sectors​ (Craft)​.

The story of MotoNovo Finance is a compelling narrative of resilience, innovation, and sustainability. Initially known as Carlyle Finance, the company rebranded to MotoNovo Finance in 2012. This strategic move was aimed at propelling the company ahead of its competitors by reinforcing its commitment to driving change in the industry. The Latin roots of its name, 'moto' (moving, driving forward) and 'novo' (refresh, renew, innovate, change), aptly reflect the company's ethos and its aspiration to lead through innovation​ (MotoNovo Finance Careers)​.

MotoNovo Finance is part of the Aldermore Group, which encompasses Aldermore Bank plc, offering a range of personal and business finance, and savings options, further broadening its portfolio and capabilities​ (DriveForward)​. This affiliation has enabled MotoNovo to expand its service offerings and reinforce its market position significantly. The company's journey is marked by significant milestones, including moving to new headquarters in Cardiff City Centre in 2016 and achieving a second-place market position in 2017, overtaking Santander. This was followed by the acquisition of British retail bank, Aldermore, by MotoNovo's parent company, FirstRand, in 2018, a strategic move that further strengthened its market standing​ (MotoNovo Finance Careers)​.

The company prides itself on its customer-centric approach, offering financial products through trusted dealerships across the UK. Instead of buyers purchasing vehicles outright, MotoNovo finances the dealership, and customers make monthly repayments over a set period. This model has been lauded for its flexibility and convenience, earning the company an excellent rating on Trustpilot from its customers​ (DriveForward)​.

Over the years, MotoNovo Finance has been recognized for its excellence in the finance industry, garnering numerous awards. These accolades include being Highly Commended for Auto Finance Provider of the Year and winning the Finance Provider of the Year award, among others. These achievements not only highlight MotoNovo's commitment to service excellence but also its dedication to engaging and supporting its workforce​ (MotoNovo Finance Careers)​.

MotoNovo Finance's culture and values center around collaboration ("Crack it together"), foresight ("Think next need"), purposeful action ("Start with why"), and innovation ("Try it out"). These core values underpin the company's operations and are integral to its ongoing success and reputation as a leading finance provider​ (MotoNovo Finance Careers)​.

In summary, MotoNovo Finance has distinguished itself as a forward-thinking and innovative company in the motor finance sector. Through strategic rebranding, significant acquisitions, and a steadfast commitment to customer service and sustainability, MotoNovo has established a robust foundation for continued growth and success. Its story is one of navigating challenges with resilience and foresight, cementing its position as an industry leader dedicated to innovation and excellence.

MotoNovo Finance and the Discretionary Commission Issue

The journey of MotoNovo Finance, marked by innovation and success, has also encountered regulatory scrutiny, highlighting the complexities inherent in the financial sector. A significant issue arose with the Financial Conduct Authority (FCA)'s clampdown on the discretionary commission system. This system, prevalent within the motor finance industry, allowed dealers to set the customer's interest rate and subsequently earn a commission from finance companies based on the interest rate margin. The FCA's review into these practices signified a critical moment for MotoNovo and similar institutions.

In January 2024, the FCA announced that it would be conducting a review into discretionary commission arrangements within the motor finance industry. This move was part of the FCA's broader effort to ensure fair consumer treatment and transparency in financial services. For MotoNovo, this meant facing scrutiny over its commission practices with dealers, which could potentially impact its business model and relationships with dealerships​ (DriveForward)​.

The FCA's concerns primarily revolved around the potential for these arrangements to lead to conflicts of interest, where the desire for higher commissions could incentivize dealers to increase finance costs for consumers, possibly leading to unfair outcomes. Such regulatory challenges underscore the balance companies like MotoNovo must strike between fostering robust business partnerships and ensuring consumer protection and transparency.

In response to regulatory pressures and the evolving financial landscape, companies across the sector have been compelled to reassess and often revise their commission structures and sales practices. While the specific outcomes of the FCA's review for MotoNovo were not detailed, the broader industry has seen a shift towards more standardized commission models and increased transparency in finance options presented to consumers.

This episode reflects the ongoing evolution of the motor finance industry, where regulatory interventions aim to align the sector more closely with best practices in consumer finance. For MotoNovo, navigating these regulatory waters is integral to maintaining its reputation and leadership in the market. The company's ability to adapt to these changes, while continuing to offer competitive and fair finance solutions, will be critical in sustaining its success and growth in a more regulated financial environment.