IMPORTANT INFORMATION - MOTOR FINANCE COMMISSION
Last updated: 19 October 2026BEWARE OF SCAMMERS
The Financial Conduct Authority (FCA) has warned that scammers are pretending to be motor finance lenders, and sometimes the FCA itself, to offer compensation that does not exist. They do this to get hold of personal details or money.
If someone contacts you out of the blue offering compensation, hang up or do not reply. We will never ask you for a PIN, password or an upfront fee. If you are not sure if a call, email or letter is from us, contact us on 01472 233200 before you do anything else.
The FCA has more information on how to protect yourself from scams. Visit the FCA website.
The FCA's motor finance redress scheme
On 30 March 2026 the FCA published the rules for an industry-wide scheme to compensate customers who were treated unfairly because of certain commission arrangements between lenders and car dealers or brokers. The scheme covers motor finance agreements taken out between 6 April 2007 and 1 November 2024 where commission was paid.
Under the scheme, an agreement may qualify for compensation where:
- • there was a discretionary commission arrangement, which allowed the dealer or broker to influence the interest rate;
- • there was a high commission arrangement, meaning the commission was at least 39% of the total charge for credit and at least 10% of the amount borrowed, and this was not properly disclosed; or
- • there was a tied arrangement, such as the lender having exclusive rights or first refusal with the broker, which was not properly disclosed.
How this affects Advantage Finance customers
We have never used any form of discretionary commission arrangement. Brokers have never been able to influence the interest rate we offer a customer.
We have never had tied arrangements with our brokers.
A very small number of our agreements, around 1% of those taken out between 2007 and 2024, may qualify because of the level of commission paid.
Most of our customers will not be due compensation under the scheme.
The scheme required lenders to prepare during an implementation period, which ended on 31 August 2026. We have reviewed our agreements against the scheme rules and will contact customers, or their representatives, in line with the FCA's timescales.
In Summary
- • We have never used discretionary commission arrangements, and we have never had tied arrangements with our brokers.
- • A very small number of our agreements (around 1%) may qualify for compensation under the FCA's scheme because of the level of commission paid.
- • Parts of the FCA's scheme are on hold while the courts consider legal challenges, which will be heard in February 2027. Compensation for agreements that qualify cannot be calculated or paid until that process ends.
- • If you have complained, we will contact you or your representative. You do not need to use a claims company, and you do not need to do anything right now.
October 2026 update – legal challenges and the partial suspension of the scheme
Four legal challenges to the scheme were brought in spring 2026: one by Consumer Voice (represented by Courmacs Legal Ltd), and three by lenders: Mercedes-Benz Financial Services, Volkswagen Financial Services and CA Auto Finance. Advantage Finance is not one of the challengers.
On 2 July 2026 the Upper Tribunal suspended parts of the scheme while it considers these challenges. Until the legal process ends, lenders do not have to calculate or pay compensation under the scheme.
The challenges will be heard between 16 and 26 February 2027, with a decision expected in the months after.
What could happen next
- • If the scheme is upheld and there is no appeal, the FCA expects compensation payments to start in 2027.
- • If all or part of the scheme is overturned, the FCA will decide what happens next. This could be a revised scheme, which the FCA says could delay compensation to 2028 or later, or complaints being dealt with individually under the normal complaints process.
What this means for you
- • If you have complained and your agreement does not qualify for compensation, we will still write to tell you, within the deadlines the FCA has set. See "When will I hear from you?" in the FAQs below.
- • If your agreement may qualify, we cannot calculate or pay compensation until the legal process allows us to.
- • If you have not heard from us yet, this does not necessarily mean you are owed compensation.
We will update this page as things develop. You can read the FCA's latest statements on the partial suspension (2 July 2026) and the hearing dates (13 October 2026).
Do I need a claims management company or law firm?
No. The FCA has designed the scheme so that customers can take part without using a claims management company (CMC) or law firm. The FCA says these firms may charge up to 36% (including VAT) of any compensation you receive. Using one will not speed up the process or improve your chances of receiving compensation.
If you have already signed up with a claims firm:
- • do not sign up with another one, as you could be charged more than one fee;
- • check your contract before cancelling, as there may be an exit fee once your cooling-off period has ended. The FCA says any cancellation fee must be reasonable and reflect the work done.
The FCA and the Solicitors Regulation Authority have issued a joint warning to claims firms about problems caused when customers are signed up with more than one firm.
How to complain to us
If you want to complain about motor finance commission, you can contact us directly. It is free and you do not need anyone to act for you.
- • Phone: 01472 570606 between 9am-5pm Mon-Fri (excluding bank holidays)
- • Email: motorcommissions@advantagefinance.co.uk
- • Post: Unit 7, Acorn Business Park, Moss Road, Grimsby, DN32 0LW.
Any complaint about commission will be handled under the rules of the FCA's redress scheme. Our complaints procedure explains how we deal with complaints.
To find out more, visit the FCA's car finance claims page, or read our frequently asked questions below.
Frequently asked questions
About commission
Commission is a fee a lender pays to a car dealer or broker when a customer takes out a finance agreement through them.
Commission is how lenders pay for finding new customers and dealing with their credit applications. It is an alternative to other costs, such as advertising or running branches with staff to do the work a broker does. It also helps brokers cover their own costs of advertising and finding a suitable lender for the customer.
No. We set our interest rates based only on our assessment of credit risk. Brokers have never been able to change the rate. Customers can apply to us directly without a broker, and the rate offered is the same.
The amount of commission varied depending on our arrangements with the broker.
Prior to November 2024, we told you that commission may be paid to the broker in the information we sent you before you signed your agreement. At the time, the rules did not require lenders to tell customers how much commission was paid. The courts have since said that, in some cases, not telling a customer about a large commission payment can make the relationship unfair. That is one reason why the FCA's scheme looks at agreements with high commission.
In October 2024 the Court of Appeal decided that car dealers and brokers owed customers certain legal duties, and that commission not properly disclosed could make lenders liable to repay it. This went further than lenders, including us, had understood the law to require.
The Supreme Court heard an appeal and, on 1 August 2025, decided that dealers and brokers do not owe customers these duties. However, in one of the cases it found that the relationship between the customer and the lender was unfair under section 140A of the Consumer Credit Act 1974. It took into account the size of the commission, how it was disclosed and the customer's circumstances.
Following that decision, the FCA confirmed it would introduce an industry-wide redress scheme so that customers would not have to go to court or use a claims firm.
About the redress scheme
It is an industry-wide scheme, set up by the FCA, to compensate customers who were treated unfairly because of certain commission arrangements on motor finance agreements taken out between 6 April 2007 and 1 November 2024. All lenders must review their agreements against the scheme rules. See "The FCA's motor finance redress scheme" above for the types of arrangement it covers.
Most of our customers' agreements will not qualify. We have never used discretionary commission arrangements or had tied arrangements with brokers. Around 1% of our agreements may qualify because of the level of commission paid.
No. If our records show that your agreement may qualify, we will write to you and explain what to do. If you have concerns about your agreement, you can still complain to us directly at any time, free of charge.
If you have complained and you are not owed compensation, the FCA's rules say we must tell you by these dates:
| Your agreement started | You complained | We will write to you by |
|---|---|---|
| On or after 1 April 2014 | By 30 June 2026 | 18 November 2026 |
| Before 1 April 2014 | By 31 August 2026 | 18 January 2027 |
| Any date | After the dates above | Within 5 months of your complaint |
If your agreement may qualify for compensation, we may not be able to give you a final answer until the legal process has finished.
No. Some customers will not hear from us until the legal process ends. Not receiving a letter does not mean compensation is due.
Your email or letter explains why. You have 1 month to accept our decision or tell us why you disagree. If you are still unhappy after we have reviewed it, you can refer your complaint to the Financial Ombudsman Service free of charge. You must do this by the date given in your letter, or the Ombudsman may not be able to help.
The FCA has set out how lenders must calculate compensation. Broadly, it is based on a refund of part of the commission and an adjustment to the interest you paid, plus interest to make up for the time you were without the money. The amount will differ from customer to customer. We cannot calculate any amounts while this part of the scheme is suspended, and the scheme may be overturned following the legal challenges.
Not before the legal challenges are decided. If the scheme is upheld and there is no appeal, the FCA expects payments to start in 2027. Once you accept an offer of compensation, we must pay it within 1 month.
The FCA will decide what happens next. It may introduce a revised scheme, which it says could delay compensation to 2028 or later. Or lenders may be required to deal with complaints individually. In that case we would usually respond within 8 weeks, and you could then refer your complaint to the Financial Ombudsman Service. We will update this page and contact affected customers if this happens.
Yes. If you are unhappy with our final decision on your complaint, you can ask the Financial Ombudsman Service to review it for free. Visit financial-ombudsman.org.uk. Please refer your complaint within the time limit given in our letter.
Complaints, claims firms and staying safe
You can contact us by phone, email or post using the details in "How to complain to us" above. Our complaints procedure explains how we handle complaints and what to expect.
You do not need to. Complaining to us directly is free, and the scheme is designed so you can take part without help. Claims firms may charge up to 36% (including VAT) of any compensation you receive, and they cannot speed up the process or improve your chances.
Yes, but check your contract with the claims firm first, as there may be a fee for cancelling after the cooling-off period. The FCA says any cancellation fee must be reasonable and reflect the work done. Once you have told the firm you are cancelling, let us know and we will deal with you directly.
You may be able to cancel without paying a fee. Complain to the firm first. If it does not reply within 8 weeks, or you are unhappy with its reply, you can contact the Claims Management Ombudsman (for claims management companies) or the Legal Ombudsman (for law firms).
We will never ask you for a PIN, password or an upfront fee to receive compensation. If you are unsure whether a contact is from us, do not reply or click any links. Contact us on 01472 233200 or using the details on this website. Scammers may also pretend to be from the FCA. The FCA will never ask you to transfer money or share your PIN or passwords.
No. Making a complaint does not affect your credit file or your agreement with us.
You should keep making your normal payments while your complaint is considered. If you are struggling to pay, please contact us as soon as possible so we can help.
Yes. If your circumstances make it harder for you to deal with us, for example because of your health, recent bereavement or money worries, please let us know. We can adjust how we communicate with you and give you more time.