New research has revealed that a majority of British motorists are worried that securing car finance is set to become significantly more difficult and expensive. This follows a landmark investigation by the UK's financial watchdog into historical commission practices within the motor finance industry.
Widespread Anxiety Over Affordability
According to data from car finance provider Carmoola, 61 per cent of drivers now fear that car finance prices could rise as a direct result of the Financial Conduct Authority (FCA) probe. The survey highlights a deep-seated concern that vehicle ownership could be pushed out of reach for many.
In fact, the findings show that two in three motorists believe getting a car on finance is about to become much harder. Furthermore, one in five drivers warned that increasing costs might force them to postpone buying a new vehicle or abandon their plans entirely.
The Core of the FCA Investigation
The regulatory issue centres on customers who took out car finance agreements without being informed that brokers or dealers were earning extra, often undisclosed, commission from lenders. These so-called "secret" commissions were the subject of a critical court case to determine if they were unfair.
A related but separate matter involves 'discretionary commission arrangements' (DCAs), which were banned by the FCA back in 2021. The recent court ruling could influence how compensation claims linked to these banned DCAs are processed moving forward.
Carmoola's CEO, Aidan Rushby, stated that the FCA's update finally provides "long-awaited clarity" for consumers who have been in limbo. He emphasised that the moment should act as a "catalyst for meaningful reform" across the sector.
Potential Industry-Wide Repercussions
The implications of the investigation are vast. Had the court sided with consumers, it could have opened the floodgates to compensation claims from millions of people who used dealer-arranged finance. The ruling's impact is expected to extend beyond motor finance, affecting financial services more broadly.
The Financial Conduct Authority is now reviewing whether to introduce a formal redress scheme. Its decision, which is expected within six weeks of the recent judgment, will be crucial in shaping how any potential compensation is managed industry-wide.
"Our research shows drivers are worried about being priced out of car ownership, and transparency has never been more important," said Mr Rushby. He added that his company was built on upfront pricing without hidden commissions and welcomed efforts to raise standards.
