Complaints About Commission Models

- We will acknowledge it.

 

- We will confirm when you can expect to receive a response.

Following the recent Supreme Court judgment and the FCA’s announcement that it will consult on a possible motor finance redress scheme, there have been industry-wide reports of scammers contacting customers and requesting personal information including names, addresses, dates of birth and banking information.

 

These scammers may pretend to be from lenders and claim that they need this information to process redress payments.

 

We are not currently contacting customers about motor finance compensation claims, and we will never ask for you to confirm banking information over the phone. If someone calls claiming to offer compensation, you should hang up immediately.

- Financial Conduct Authority (FCA): The FCA is the organisation that regulates financial services in the UK. Its role is to make sure firms treat customers fairly, provide clear information, and sell products that are right for their needs.

 

- Commission Models: A commission model is the way a dealer or broker is paid by a lender when arranging finance for a customer. It explains how commission is calculated and when it is paid.

 

- Discretionary Commission Agreements (DCA): Discretionary Commission was a type of commission where a dealer or broker could set or change the interest rate a customer paid. The amount of commission a dealer received depended on the rate they selected. This model is no longer allowed by the FCA.

 

- Non-Discretionary Commission Agreements (Non-DCA): This is a type of commission where the dealer or broker cannot change the interest rate to affect the amount of commission they receive. The commission is set in advance by the lender and does not depend on or impact the customer’s rate.

The FCA is reviewing complaints about motor finance commission models and has temporarily paused the usual 8-week deadline for firms to issue final responses.

 

Key Dates and Announcements

 

11 January 2024: The FCA announced that they would be conducting an industry review on vehicle finance Discretionary Commission models. They paused the 8-week deadline for handling complaints and providing final response letters.

 

The 8 week timeframe for providing a final response was paused from 17th November 2023 to 4th December 2025 and the FCA began consulting with firms and proposed to extend the pause to July 31st 2026.

 

This allowed time to consider an alternative way of dealing with DCA complaints, such as a consumer redress scheme if the FCA believed it to be appropriate.

 

You can find more information about the latest update from the FCA at the following link:

Car finance claims | FCA (Opens in new window)

 

25 October 2024: The Court of Appeal issued a judgment in relation to three appeals from previous motor finance Discretionary Commission claims and resulting county court judgments in favour of two lenders, FirstRand Bank trading as MotoNovo Finance, and Close Brothers Limited. The Court of Appeal judgment found in favour of the claimants and went beyond the established law and regulation for motor finance commission disclosure requirements.

 

11 December 2024: The lenders involved in the Court of Appeal hearing were given permission to appeal to the Supreme Court.

 

1 - 3 April 2025: The Supreme Court hearing took place. Please see below for the outcome of the hearing.

 

1 August 2025: The Supreme Court gave its judgment on the appeal and the FCA announced that it will begin a consultation on a possible customer redress scheme in early October 2025.

 

The Supreme Court found that car dealerships in motor finance arrangements do not hold duties of loyalty to the exclusion of their own interests. This means that dealerships are not legally required to prioritise the customer's interests above their own. Therefore, commission payments that customers are not aware of are not considered to be bribes. However, in some cases, a lack of transparency or fairness in how these agreements were presented to customers may be considered unfair under the Consumer Credit Act 1974.

 

7th October 2025: The Court of Appeal looked at three cases involving Discretionary Commission Arrangements (DCA) with motor finance agreements. These cases involved two lenders - MotoNovo Finance and Close Brothers.

 

The Court agreed with the customer claims that dealers did have a responsibility to the customers to declare the commission paid.

 

What this means for you

 

If you have already made a complaint to Toyota Financial Services, you do not need to take any action at this time.

Before 28 January 2021, some lenders allowed brokers (such as car dealers) to set the interest rate given to customers on car finance. The broker’s commission depended on the rate, and higher interest rates sometimes meant higher commission. This is known as a Discretionary Commission Arrangement. The FCA banned this practice in 2021.

A Non-Discretionary Commission Arrangement is a fixed commission. The broker or dealer cannot change the interest rate you pay. Commission may be a fixed amount or a percentage of the amount borrowed and is set in advance by the lender.

You may have an eligible complaint if:

 

1. You entered into a Toyota Personal Contract Purchase (PCP) or Toyota Hire Purchase (HP) agreement before 28 January 2021 and your agreement included a Discretionary Commission Arrangement (DCA); or

 

2. You entered into a Toyota Personal Contract Purchase (PCP), Toyota Hire Purchase (HP) or Personal Contract Hire (PCH) agreement and your agreement included a Non-Discretionary Commission Arrangement (Non-DCA).

Because of the pause currently in place by the FCA, at this time we are not required to issue final responses to complaints about either DCA or Non-DCA.

 

These temporary changes mean that firms don't need to provide final response letters to:

 

1. Discretionary Commission complaints during the pause period that started on 17 November 2023 and is currently due to end on 31 May 2026; and

 

2. Non-Discretionary Commission complaints received from 26 October 2024 and ending on 31 May 2026.

 

If you have previously received a communication from us stating that we would be in touch after 4 December 2025, please note that we will now issue our final response after the end of the pause on 31 May 2026.

 

Toyota Financial Services will provide further details on this webpage when the FCA have reached a decision.

If you have previously submitted a complaint to us, you do not need to take any action at this time. We will provide further updates on this page in line with updates provided by the FCA.

 

Does this apply to new and used vehicles?

 

Yes, this applies to both new and used vehicles. 

The FCA’s review of Discretionary Commission Arrangements covers Hire Purchase (HP) and Personal Contract Purchase (PCP) agreements.

 

The FCA’s review of Non-Discretionary Commission Arrangements covers Hire Purchase (HP) and Personal Contract Purchase (PCP) and Personal Contract Hire (PCH) agreements.

 

If I log a commission complaint, when will I get a final decision from you?

 

If you submit a relevant complaint, you will receive a final response from Toyota Financial Services after the FCA’s response pause has ended.

 

The pause is currently due to end on the 31 May 2026.

 

The FCA has taken this step to ensure complaints are dealt with consistently by all motor finance providers. 

Yes. The normal time limits have been extended and how long you have depends on when you receive your final response letter and which type of commission model applied to your agreement.

 

Your final response letter will tell you whether your agreement had a Discretionary Commission Arrangement or a Non-Discretionary Commission Arrangement.

 

If your agreement had a Discretionary Commission Arrangement:

 

- Final response received between 12 July 2023 and 29 April 2025 - you have until 29 July 2026 to take your complaint to the Ombudsman.

 

- Final response received between 30 April 2025 and 29 January 2026 - you have 15 months from the date of the letter.

 

If your agreement had a Non-Discretionary Commission Arrangement:

 

- Final response received between 21 June 2024 and 29 April 2025 - you have until 29 July 2026.

 

- Final response received between 30 April 2025 and 29 January 2026 - you have 15 months from the date of the letter.

We may not be able to find your agreement if:

 

- You’ve moved house or changed your name.

- The agreement is more than six years old.

- The information provided by you does not match our records.

 

To help us find your agreement, please provide:

 

- Agreement number or vehicle registration.

- Date of birth.

- Full name (as at the end of the agreement).

- Address and postcode (as at the end of the agreement).

You should check your contract with the claims management company to see what it says about termination and your right to withdraw from the agreement. We will continue to correspond with the claims management company you have instructed until we receive confirmation from them that you have terminated your agreement. Once we receive this, we will update our records and contact you directly.