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What is hidden commission on car finance?
What it is
When you bought a car on PCP or HP, you probably didn’t walk into a bank to arrange the loan. The dealer did it for you, or used a broker to shop the deal to a panel of lenders. For doing that work, the lender paid the dealer or broker a commission. That payment is a normal part of how motor finance has always worked. The problem is what you were told about it — and in most cases, that was very little.
Commission came in three main shapes. Flat commission was a fixed amount per deal. Volume-linked commission rewarded dealers for hitting sales targets across many agreements. And until 28 January 2021, discretionary commission arrangements let the dealer earn more by pushing your interest rate higher — the bigger the rate, the bigger the cut. “Hidden commission” is the umbrella term that covers all of these where the existence, size, or basis of the payment wasn’t properly disclosed to the borrower. The UK Supreme Court’s 2025 decision in Johnson v FirstRand set the current benchmark: non-disclosure of motor finance commission, combined with other facts such as a high commission amount or an undisclosed lender-dealer tie, can render the credit relationship “unfair” under section 140A of the Consumer Credit Act 1974.
Why it matters for your claim
Even if your agreement isn’t strictly a DCA, you may still have a hidden-commission claim. The question is what you were told. If the commission wasn’t disclosed at all, if the basis wasn’t explained, or if the size was material relative to the interest rate you paid, that may be enough to argue the relationship was unfair. The FCA’s 2026 motor finance redress scheme is designed to cover DCAs, high-commission arrangements (typically over 35% of the total charge for credit), and certain lender-broker tied relationships — all variants of hidden commission. Most PCP and HP agreements signed between 2007 and 28 January 2021 sit within scope, but eligibility turns on the specifics of your agreement and the lender’s disclosure practices at the time.
Your free alternatives and how we charge
Checking whether you may have a car finance claim with Total Claim is free, with no obligation. You can also pursue a complaint direct to your lender or, if you're unhappy with their response, escalate it for free to the Financial Ombudsman Service.
If you choose to use Total Claim and we win compensation for you, our success fee is 18–36% (including VAT) of the redress amount, charged only on success. You have a 14-day cooling-off period after signing; cancelling after that may be charged on an hourly basis for work already done.