Discretionary Commission Arrangements - Compaints and refunds

Have you been Mis-sold or Mis-led on Car Finance or Loans?

Redbridge Finance Ltd is a Claims Management Company that can help you get the best possible outcome from your claim. We operate with professionalism and care for our clients, working to get the best possible outcome.

Register today so we can start the process.

You do not need to use a Claims Management Company. You can make the claim directly to the lender and if they reject your complaint you can take it to the Financial Ombudsman Service free of charge, but you must do this within 6 months of the lenders Final Decision Letter.

Please do not sign up with us if you do not intend on paying our fees if we get you a cash refund. Please do not try and convince yourself it is acceptable to not pay, it isn't.

So if you don't want to pay for our services, please use a different company.

 

Very personal service, quick response, hugely experienced in Claims Management.

True No Win No Fee. We only charge if you are actually sent cash (for example a £5,000 reduction in balance would mean you owe us nothing!).

Check our Google reviews to see what real customers think about us.

 

Discretionary Commission

Discretionary Commission Arrangements (DCAs) were a common practice in the UK motor finance industry, but they have come under intense scrutiny and were ultimately banned by the Financial Conduct Authority (FCA) in January 2021. Here's a breakdown of what they are and why they are a concern:

What are Discretionary Commission Arrangements?

In a DCA, car dealerships or brokers had the flexibility to set the interest rate on a car finance agreement. The higher the interest rate they offered to the customer, the higher the commission they received from the lender.This created a potential conflict of interest.

Why are DCAs a concern?

  • Lack of Transparency: Customers were often unaware that the interest rate on their finance agreement was influenced by the dealer's commission. This lack of transparency meant customers might not have been getting the best possible deal.
  • Potential for Overcharging: Dealerships were incentivized to mark up interest rates to maximize their commission, potentially leading to customers paying more than necessary for their car finance.
  • Unfair Outcomes: Customers could end up with higher monthly payments and a larger total cost of credit without realizing it was partly due to the dealer's commission. This disproportionately affected those who may be less financially savvy or have less bargaining power.
  • Breach of Trust: DCAs undermined the trust between customers and dealerships, as the customer's best interests might not have been the primary motivator for the dealer.

The FCA's Intervention:

The FCA banned DCAs in 2021 to address these concerns and protect consumers. This ban aimed to:

  • Increase Transparency: Ensure customers are fully informed about the costs of car finance and how commissions are earned.
  • Promote Fairer Pricing: Prevent dealerships from inflating interest rates for their own gain.
  • Restore Trust: Rebuild confidence in the motor finance industry by ensuring customers are treated fairly.

Ongoing Impact:

Despite the ban, the legacy of DCAs continues to impact the motor finance industry. The FCA is currently conducting a review into the historical use of DCAs and their impact on consumers. This could lead to further regulatory action and potential redress for customers who were overcharged.

In essence, Discretionary Commission Arrangements were a controversial practice that allowed car dealerships to prioritize their own financial gain over the best interests of their customers. The FCA's ban aims to create a fairer and more transparent motor finance market.

Click the logo below to go to our dedicated Discretionary Commission Arrangement site:

 

 

Illustration of Fees

The figures quoted are only calculated on actual money sent to you. If you get a balance reduction, we do not charge any fees on the balance reduction element, just on money sent to you by the lender.

Band

Redress awarded for a claim (£)

The maximum percentage rate of charge

The maximum total charge (£)

1

£1-£1,499

30% plus vat

£420

2

£1,500 - £9,999

28% plus vat

£2,500

3

£10,000-£24,999

25% plus vat

£5,000

4

25,000-£49,999

20% plus vat

£7,500

5

£50,000 or above

15% plus vat

£10,000

These are some examples:

Band 1

Compensation amount £1,000. Our Fee £300 + VAT (£360 inc VAT). You get £640

Compensation amount £1,499. Our Fee £350 + VAT (£420 inc VAT). You get £1,079

Band 2

Compensation amount £5,000. Our Fee £1,400 + VAT (£1,680 inc VAT). You get £3,320 

Compensation amount £9,999. Our Fee £2,083.33 + VAT (£2,500 inc VAT). You get £7,499 

Band 3

Compensation amount £15,000. Our Fee £3,750 + VAT (£4,500 inc VAT). You get £10,500

Compensation amount £24,999. Our Fee £4,166.67 + VAT (£5,000 inc VAT). You get £19,999

Band 4

Compensation amount £30,000. Our Fee £6,000 + VAT (£7,200 inc VAT). You get £22,800

Compensation amount £49,999. Our Fee £6,250 + VAT (£7,500 inc VAT). You get £42,499

Band 5

Compensation amount £50,000. Our Fee £7,500 + VAT (£9,000 inc VAT). You get £41,000

 

 

118 118 Money 

Our average refund from 118 118 Money is £2,871.

118 118 Money offers loans of between £1,000 and £3,000 at an interest rate of 49.9% Representative. They also now offer credit cards to the same sub prime group at an interest rate of 34.0% pa. 118 118 Money upheld 43.46% of complaints made between July and December 2020.

UK Credit 

Making UK Credit Refund Complaints is no different to most other lenders. The challenge with UK Credit is that they like sending information in the post which can become frustrating. When they do send information by email, they encrypt the data (which is good), but they like to embed files in Excel which can be difficult to open. 

UK Credit Refunds are very similar to other Guarantor lenders, such as Amigo Loans. They seem to offer almost exactly the same amounts of money and they charge the same high interest rate. Our average refund for UK Credit claims is £4,177.15

MoneyBarn Car Finance

Moneybarn is a well established car, van and motorcycle finance company. In 2014 it was purchased by Provident Financial PLC. They have not always treated customers well or fairly having been fined almost £3m by the FCA. Read about it here

Lending Stream

 Lending Stream refund complaints tends to get fair payouts for the customer with our average refund for them being £1,524 since our first complaint back in 2017.

Loans2Go

Loans2Go (trading name of Loans2Go limited) is a loans provider offering unsecured loans of £250 to £3,000, from 18 months to 24 months.

Loans2Go provide their service of super-fast, easily approved loans at a representative APR of 770%, up to 937.8%. This means if you borrow £550 over 18 months at a flat rate of 180% per annum (fixed) you will be repaying £2,035.08 in total.

Mobile Money 

Mobile Money have been in business for many years and focus on sub prime lending. The interest rates charged by Mobile Money are very high (in our opinion) and appear to vary between 49.9% to 499.9%. Considering they have your car to act as a guarantor of the loan, that seems a lot of interest to charge.

We are starting to get good results with this car finance lender. The average offer is £3,979.35.

Avant Credit

Our average refund from Avant Credit is £4,924.

Avant Credit have lent to more than 80,000 people and have lent a total of £250 million. That tells us that the average loan size is £3,125. They charge 42.5% interest representative, which does make them cheaper than some of their competitors, but still in the mid price range. 

Avant Credit is not accepting any new loans. Avant Credit complaints had 1,545 complaints in 2020 and upheld 32.7% of those complaints.

GuarantorMyLoan 

Guarantor My Loan are another guarantor lender, this time charging 48.9% APR. This makes them slightly better value than Amigo Loans, but still very expensive. With Guarantor My Loan you can borrow between £1,000 and £10,000 over 12 to 60 months.

When we make a Guarantor My Loan refund claim we have to be very careful as they will sometimes make a small offer to the customer and try and get the customer to accept without us knowing. The offer is always a lot less than we would hope to be able to get either as a result of the Guarantor My Loan Refund Complaint or when we take the case to the FOS.

 

Important Documents

 

The Rise and Fall of Payday Lenders: A Changing Landscape

The UK's payday lending market has undergone a dramatic transformation in recent years. Once dominated by companies offering high-cost, short-term loans, the industry has seen a wave of closures and consolidations due to increased regulation, changing consumer behaviour, and increased competition.

Here's a look at some of the prominent payday lenders and short-term loan companies that have ceased trading:

Big Names That Disappeared:

  • Wonga: Perhaps the most well-known payday lender, Wonga collapsed in 2018 after a surge in compensation claims for mis-selling loans.
  • QuickQuid: Another major player, QuickQuid, went into administration in 2019 following a similar flood of complaints.
  • The Money Shop: Known for its high-street presence, The Money Shop ceased trading in 2019 after its parent company went into administration.
  • Payday Express and Payday UK: These sister companies stopped offering new loans in 2017 and eventually ceased trading.
  • Sunny: Sunny, owned by Elevate Credit International Limited, was placed into administration in 2020.

Other Companies That Closed Down:

  • MyJar: My Jar ceased operations in 2020.
  • Peachy: Cash On Go Ltd, trading as Peachy, went into administration in 2020.
  • Uncle Buck: Uncle Buck stopped accepting new loan applications in 2020 after going into administration.
  • Wageday Advance: Wageday Advance went into administration in 2019.
  • Satsuma Loans: Satsuma Loans went into administration in 2021.
  • SafetyNet Credit: SafetyNet Credit went into administration in 2023.
  • Tappily: Tappily ceased trading in 2023.

Factors Contributing to the Decline:

  • FCA Regulation: The Financial Conduct Authority (FCA) introduced stricter rules on affordability checks, interest rate caps, and debt collection practices, making the payday lending business less profitable.
  • Compensation Claims: A surge in compensation claims for mis-sold loans put significant financial pressure on many lenders.
  • Changing Consumer Behaviour: Increased awareness of the risks of high-cost credit and the availability of alternative borrowing options led to a decline in demand for payday loans.
  • Competition: The emergence of new, more responsible lenders and fintech companies offering alternative credit solutions increased competition in the market.

The Future of Short-Term Lending:

While the payday lending landscape has changed dramatically, the demand for short-term credit remains. New players are emerging, offering more flexible and affordable alternatives, with a focus on responsible lending and customer well-being. The FCA continues to monitor the market to ensure consumers are protected and treated fairly.

If you're considering a short-term loan, it's crucial to:

  • Explore all available options: Consider alternatives like credit unions or overdrafts.
  • Compare interest rates and fees: Ensure you understand the total cost of borrowing.
  • Check the lender's authorisation: Make sure the lender is authorised and regulated by the FCA.
  • Read the terms and conditions carefully: Understand the repayment terms and any potential penalties.
  • Borrow only what you can afford to repay: Avoid taking on debt that you cannot manage.

This article provides a comprehensive overview of the changing landscape of the payday lending market in the UK. It highlights the companies that have ceased trading and the factors that contributed to their decline. It also emphasizes the importance of responsible borrowing and encourages consumers to explore alternative options before taking on high-cost credit.

George Banco

Sorry no new claims being accepted

Buddy Loans 

Now In Administration - Sorry no new claims being accepted

Provident 

Sorry no new claims being accepted

Amigo Loans

Sorry no new claims being accepted

More information can be found by following this link: https://www.amigoscheme.co.uk

Morses Club 

Now In Administration - Sorry no new claims being accepted

Everyday Loans

Sorry no new claims being accepted

Varooma Logbook / V5 Loans

Now In Administration - Sorry no new claims being accepted

Safety Net Credit 

Indigo Michael Limited (Trading as SafetyNet) Now In Administration - Sorry no new claims being accepted