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What Are Incentivised Hidden Commissions?
By Jamie Scott
In this short blog, we will touch bases on what are incentivised hidden commissions and how you could have been paying more for your car finance deal due to banning on commission structures.
The banning made by the FCA on January 28th 2021 could well save consumers 165 million a year, the FCA also stated.
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Incentivised commissions leading to higher interest rates.
If you purchased car finance before January 2021 then you may have been charged a higher interest rate because a salesperson wanted to earn money on top of their wages.
Unexpected car finance owners may have been overcharged £1000s due to a commission structure that incentivised car salespeople to charge a higher amount of interest in order to obtain more in commission.
What are incentivised commissions?
Incentivised commissions are when a salesperson or broker is able to dictate the rate of Intrest, the higher the interest rate the more that can be earned in commission.
This commission model can lead to consumers paying more in monthly payments as salespeople can raise the rate of interest to enable a large bonus at the end of the week or month
Why was the commission's structure banned
The banning of Incentivised and hidden commissions were leading car finance consumers on PCP or HP to pay more on their interest rates as greedy salespeople and car dealerships wanted to earn more money.
Jonathan Davidson, director of supervision for retail and authorisations at the FCA.l said.
Some motor dealers are overcharging unsuspecting customers over £1000 in interest charges in order to obtain bigger commission payouts for themselves. This is unacceptable.
How the commission structure worked
selling finance such as PCP and hp car finance.
A salesperson was able to dictate the rate of interest and also not disclose this information to the buyer or within their car finance agreement paperwork.
For example:
If a salesperson sells a PCP agreement that is worth 15k he could earn up to £420 in commission.
So if a consumer wants to purchase a PCP car finance deal that worked out at around13.5k,
then salesperson could charge a higher amount of interest to bump it over the 15k threshold I’m ordered to obtain more in commission.
Can I claim back car finance commissions myself?
Yes, you can always contact the finance company yourself and raise a dispute, or ask to know how much was earned In undisclosed commissions, and ask for the money back.
What if they reject my claim.
If you feel like you are not getting the response you thought you can raise this with the FCA (financial conduct authority).
The FCA are a government body that regulates the finance industry in the UK.
You can make a free car finance claim for hidden commissions via the FCA website here if you feel mis-sold.
Or if you don’t ha e the time and want to have a solicitor take on your car finance claim on a no win no fee, please feel free to contact us or fill in this forum.
Please note, in the event of a no win no fee car finance claim our legal partners would stand to take a fee.
The client (You) would stand to take the majority of the car finance compensation.
For more information on starting a no win no fee car finance claim contact us here
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