Vehicle finance discretionary commission complaints
The Financial Conduct Authority says some customers may have been charged too much on their vehicle finance before 2021.
Get support with commission complaintsCommission disclosure
Looking for the commission disclosure form?
We’ve made it easier for your customers to give consent for commission payments. When your customer goes through the e-sign journey, they’ll also see the commission disclosure form. All you need to do is propose the customer to us as normal. Keep reading below for more information.
Due to a judgment handed down by the Court of Appeal on 25 October 2024, we now require explicit consent from the customer that they agree to you being paid a commission for arranging their vehicle finance.
To meet this requirement, we must set out to the customer the following:
- The existence and nature of commission - that you’ll receive a one-off payment for arranging finance on our behalf, making it clear that it’s not an additional charge to the customer.
- The relationship between us and you - whether you work exclusively with us, or with a panel of lenders, and that you’re not impartial in the process.
- The method we use to calculate the commission amount - that this is a percentage of the amount borrowed
- The amount of commission you’ll receive - as soon as this is known.
Commission disclosure factsheet
For more information on your responsibilities as a Credit Broker, including some example wording you might want to incorporate into your own disclosure documents.
For partners using Codeweaver’s Showroom or iVendi proposal systems
What do you need to do?
As part of this new requirement, we need to obtain consent from the customer to pay you a commission for setting up their vehicle finance.
To do this, we’ve added a commission disclosure form to our existing electronic signing journey – making this as quick and easy as possible for you and the customer. If your customer chooses to wet sign, you’ll need to print out the commission disclosure form for them, alongside the key facts, finance agreement, and terms and conditions.
For both e-signature and wet sign (handwritten) journeys, your customer must be presented with the commission disclosure form to sign first, before moving on to sign the agreement.
You can propose customers to us as normal, but there’s an extra step for detailed disclosure for us to capture that the customer’s understands how we calculate commission and that they agree to the amount of commission you’ll earn.
Let’s look at the journey:
- Submit a customer proposal to us via your normal proposal system, this will include an early commission disclosure and online consent before you submit. We’ll then go through our usual underwriting process.
- If the proposal is accepted, the system will show as ‘Approved’.
- Once the loan is approved, we'll send the following documents to your customer:
- Commission disclosure form
- Key facts
- Finance agreement
- Terms and conditions
- Direct Debit Mandate - After we’ve received the signed documents from your customer, we’ll gather all the commission disclosure evidence and verify this information.
- When these documents have been verified, we’ll begin the finance agreement and pay you as normal.
If you need help at any stage, please contact your account manager or partner hub. Contact details can be found here.
Frequently asked questions
What if I don’t have an existing disclosure document?
You should create your own Initial Disclosure Document that suits your business needs to incorporate into your own sales process.
To see our example wording which you could incorporate into your own disclosure documents, download our commission disclosure factsheet.
Who needs to sign a commission disclosure form?
The customer named on the agreement needs to sign a commission disclosure form. Their name needs to match exactly what was given on the legal agreement.
If the agreement is with more than one person (joint hirers, partnerships or limited companies), each person named on the agreement will need to complete separate forms.
How can I disclose how commission is calculated before a lender has been selected?
If you use a panel of lenders who all calculate commission differently, your initial disclosure can include a summary of how commission is typically calculated. For example: The commission payable is a one-off payment that is either a fixed fee, or a fixed percentage of the amount that you borrow.
What if the precise amount of commission is not known at an early stage?
We recognise that the new requirement for detailed disclosure – sharing the amount of commission and how it’s calculated – may only be possible (in some cases) at the point a lender is selected, at application stage.
This is why it's important to explain commission to the customer at the pre-quote stage. You should also explain that the customer will know the final commission amount before they enter into the vehicle finance agreement.
The final disclosure is the only part of the journey that we control as a lender. This is our evidence that fully informed consent has been captured and is what is sent to the customer alongside their credit agreement for their records.
What happens if the customer doesn’t agree to me receiving commission?
If a customer doesn’t agree to you receiving a commission for setting up their vehicle finance agreement, we’re unable to proceed with their application. They'll need to find an alternative way of paying for their vehicle.
What happens if the customer wants me to receive less commission?
We’re unable to make commission adjustments. In this instance, the customer will need to find an alternative way of paying for their vehicle.
Why do I need to disclose all these details about the commission?
Due to a judgment handed down by the Court of Appeal on 25 October 2024, we now require explicit consent from the customer that they agree to you being paid a commission for arranging their vehicle finance.
To meet this requirement, we must set out to the customer the following:
- The relationship between us and you
- The existence of commission
- The nature of the commission
- The amount of commission you’ll receive.
- The method we use to calculate the commission amount.
Before their vehicle finance can be set up, the customer must sign a form to say they understand the relationship between us, that they agree to you receiving commission and the amount you’ll receive.
Will other lenders take a similar approach?
We’re unable to comment on any action other lenders may or may not take.
What happens if I don’t want to work in this way?
As this is now a legal requirement, we need all our partners to explicitly disclose commission to the customer. If you don’t want to do this, unfortunately we’re unable to continue working with you.
Do I need to disclose commission on unregulated agreements?
Yes. The law has changed so you’ll need to disclose commission on any vehicle finance agreement. This legal standard has higher authority than existing regulation.
What if I don’t receive commission?
You can explain this to your customer, but you will still need to take customers through our new commission disclosure process. This is to make sure your customer understands the business relationship between us and you.
Do I still need to use your Commission Disclosure Form on your website?
No, you don’t need to use this form any longer and it will no longer be available on our website going forward. If you’ve saved a link to the document on your desktop you can now delete it. We’ve made it easier for your customers to give consent for commission payments as part of our automated proposal and e-sign journeys.
Has anything else changed in the customer journey?
No, other than including these commission disclosure touchpoints in our application and signature journeys, all other parts of our process remain the same.
You will still need to properly undertake any other regulatory and legal disclosures as part of the customer journey (for example data protection or other obligations under CONC).