Complaint Letter Template

MOTORREDRESS — a service operated by Milberg London LLP
Third Floor, Sutton Yard, 65 Goswell Road, London EC1V 7EN
Tel: [Freephone TBC] | Email: [email protected]
SRA No. 670230

Last Updated: March 2026  |  Document Version: v3.0

FORMAL COMPLAINT — MOTOR FINANCE COMMISSION

We act on behalf of our client in relation to their motor finance agreement. We are instructed pursuant to the enclosed Letter of Authority, and we request that all future correspondence regarding this matter be directed to this firm.

We write to make a formal complaint regarding the commission arrangements associated with the finance agreement and to request that this letter be treated as a complaint in accordance with the Financial Conduct Authority’s Dispute Resolution rules (DISP).

1. The Complaint

1.1 Failure to Disclose Commission

The Broker received a commission, fee, or other financial benefit from the lender for introducing our client’s business and/or arranging the finance agreement. Our client was not adequately informed of:

• The existence of the commission arrangement;
• The amount or rate of commission payable;
• The nature of the commission arrangement (including whether it was a fixed or variable/discretionary commission);
• How the commission may have affected the interest rate or total cost of credit offered to our client;
• The Broker’s financial interest in recommending this particular finance product.

The duty to disclose arises from the principles established in Hopcraft v Close Brothers Ltd; Johnson v FirstRand Bank Ltd; Wrench v FirstRand Bank Ltd [2025] UKSC 33, in which the Supreme Court confirmed that secret and half-secret commission arrangements in motor finance give rise to unfair relationships. The Supreme Court held that a broker arranging motor finance owes fiduciary duties to the customer, and that the lender’s knowledge of the broker’s conflict of interest is sufficient to engage liability.

1.2 Discretionary Commission Arrangement (DCA)

Where applicable, we believe that the commission arrangement between the lender and the Broker was a Discretionary Commission Arrangement (DCA), under which the Broker had the ability to set or adjust the interest rate charged to our client, with the commission increasing as the interest rate increased. This arrangement created a direct conflict of interest: the Broker was financially incentivised to charge our client a higher interest rate in order to maximise its own commission, rather than acting in our client’s best interests.

The FCA banned DCAs with effect from 28 January 2021 (PS20/8) precisely because of the consumer harm they caused.

The FCA’s Motor Finance Diagnostic Report (March 2025) confirmed that DCAs resulted in widespread consumer detriment, with many consumers paying significantly more for their finance than they should have.

1.3 Excessive Commission

Even if the commission was not discretionary, we contend that the commission paid to the Broker was excessive — specifically, that it exceeded 35% of the total cost of credit and/or 10% of the amount borrowed. Commission at this level is inherently likely to give rise to an unfair relationship, as it significantly inflates the cost of credit to the consumer without any corresponding benefit. In Johnson v FirstRand Bank Ltd [2025] UKSC 33, the Supreme Court noted that commission amounting to 25% of the advance of credit and 55% of the total charge for credit was “so high” as to be a “powerful indication” of unfairness.

1.4 Contractually Tied Arrangement

Where applicable, the Broker was contractually tied to the lender and/or a limited panel of lenders, meaning the Broker was not acting as an independent credit broker. Our client was not informed of this limitation and was led to believe (or at least not disabused of the belief) that the Broker was sourcing the most competitive finance available. This failure to disclose the commercial tie compounds the unfairness of the commission arrangement.

1.5 Unfair Relationship

The failures described above gave rise to an unfair relationship within the meaning of sections 140A to 140C of the Consumer Credit Act 1974.

In reaching this conclusion, we rely on the principles established in:

• Hopcraft v Close Brothers Ltd; Johnson v FirstRand Bank Ltd; Wrench v FirstRand Bank Ltd [2025] UKSC 33 — the Supreme Court confirmed that secret commission arrangements in motor finance give rise to unfair relationships, that the broker owes fiduciary duties to the customer, and that informed consent to commission is required;
• Hurstanger v Wilson [2007] EWCA Civ 299 — establishing the principle that undisclosed commission creates an unfair relationship;
• Wood v Commercial First Business Ltd [2021] EWCA Civ 471 — on the relationship between broker commission and unfair relationships.

1.6 Regulatory Context

The FCA’s Diagnostic Report (March 2025) found widespread failures across the motor finance industry in the disclosure of commission arrangements. The FCA has confirmed that many consumers paid more for their finance than they should have as a result of these practices.

The FCA consulted on an industry-wide Motor Finance Consumer Redress Scheme (CP25/27, October 2025), reflecting the systemic nature of these failures. The proposed scheme covers agreements entered into between 6 April 2007 and 1 November 2024 where commission was not adequately disclosed. The FCA estimates total redress costs of approximately GBP 8.2 billion.

The FCA published PS25/18 in December 2025, confirming that the complaint handling pause will end on 31 May 2026.

2. What We Are Asking For

We request that the lender:

1. Acknowledge this complaint within 5 working days;
2. Confirm the following in relation to the agreement:
   • Whether a commission was paid to the Broker, and if so: the amount (GBP), type (fixed, variable, DCA, or other), percentage of amount financed, whether it was disclosed at the point of sale, and what documentation was provided;
   • The flat rate of interest (“buy rate”) that would have applied absent any broker commission adjustment;
   • The interest rate actually charged (“customer rate”);
   • The difference between the two rates (“rate adjustment” or “broker uplift”);
   • The total amount of interest paid over the life of the agreement versus the amount that would have been payable at the buy rate;
   • Whether the Broker was contractually tied or operated on an exclusive or limited panel;
   • Whether the lender had oversight of or approved the Broker’s commission-related disclosures;
3. Provide a final response within the timeframe required under DISP rules (extended to 31 May 2026 for complaints within the FCA pause period, per PS25/18);
4. Calculate and pay fair redress to our client, including:
   • A refund of the excess interest paid as a result of the undisclosed and/or excessive commission arrangement;
   • Interest at the Bank of England base rate plus 1% per annum on the overpayment;
   • Compensation for any distress and inconvenience caused;
   • A proportionate refund of any early settlement charge that was inflated by the excess interest.

3. Subject Access Request

In addition to the above complaint, and without prejudice to it, we make the following request on behalf of our client pursuant to Article 15 of the UK General Data Protection Regulation (UK GDPR) and section 45 of the Data Protection Act 2018:

Please provide copies of all personal data held relating to our client and the agreement, including but not limited to:

• The complete credit agreement and all pre-contractual documentation (including the pre-contract credit information, SECCI form, and adequate explanations);
• The Broker’s application or submission;
• All commission agreements, schedules, or commission statements relating to this agreement;
• Internal records showing the interest rate offered to the Broker (“buy rate”) and the interest rate charged to our client (“customer rate”);
• All correspondence between the lender and the Broker regarding this agreement;
• All internal file notes, underwriting records, and decision records;
• The complaint file (if any prior complaint has been recorded);
• Any documentation provided to our client regarding commission;
• Records of any training or guidance provided to the Broker regarding commission disclosure;
• Records of any monitoring or audit of the Broker’s sales practices.

The lender is required to respond to this request within one calendar month of receipt (Article 12(3) UK GDPR).

4. Financial Ombudsman Service

If the lender does not uphold this complaint, or if we do not receive a satisfactory final response within the permitted timeframe, we reserve the right to refer this complaint to the Financial Ombudsman Service (FOS) on our client’s behalf.

We also reserve the right to issue court proceedings under sections 140A–140C of the Consumer Credit Act 1974 if appropriate.

5. FCA Redress Scheme

We note that the FCA consulted on a Motor Finance Consumer Redress Scheme (CP25/27) and is expected to announce whether it will proceed by the end of March 2026. If the scheme is introduced before this complaint is resolved, we will advise our client on the most appropriate route to redress. This complaint is made without prejudice to our client’s rights under any such scheme.

6. Letter of Authority

The client’s signed Letter of Authority confirming our instruction to act is enclosed. All correspondence should be directed to:

Milberg London LLP (MotorRedress)
Third Floor, Sutton Yard, 65 Goswell Road, London EC1V 7EN
Email: [email protected]

Enclosures:

1. Signed Letter of Authority
2. Copy of finance agreement (if available)
3. Credit search results (agreement identification)