A major car finance scandal is unfolding in the UK and it could have implications for Irish motorists.
The UK’s Financial Conduct Authority (FCA) has found that millions of drivers were overcharged because dealers received undisclosed commissions from lenders. These payments often depended on the interest rate the customer was charged, meaning dealers could earn more by setting a higher rate.
On 20 October 2025, Bank of Ireland UK announced that it has set aside €400 million to compensate customers. The sums involved show just how serious this problem has become across the industry, and why Irish car owners should take notice.
How the Commission Model Worked
When buying a car on finance, many people assumed the dealer was finding them the best available deal. In reality, under a “discretionary commission arrangement” (DCA), the dealer could adjust the interest rate, and the higher the rate, the bigger their own commission.
These commissions were rarely, if ever, explained to customers. UK courts have already ruled that when commissions are hidden or only partly disclosed, the loan may be considered unfair. A final decision from the UK Supreme Court, expected by the end of 2025, could confirm lenders’ liability even where limited disclosure took place.
What It Means for Ireland
Here in Ireland, similar practices existed before the Central Bank of Ireland stepped in.
From 31 July 2024, discretionary commission arrangements were banned, as they were deemed incompatible with a lender’s duty to act in the customer’s best interests.
Next year, the Consumer Protection Code 2025 will strengthen the rules even further: all lenders and brokers must fully disclose any commissions paid on car-finance or other credit products.
These new standards raise clear questions about older car-finance agreements signed before the ban. If your finance cost was inflated because a dealer earned a hidden commission, you may be entitled to a refund.
What You Can Do If You Were Overcharged
If you bought a car on finance in recent years, you may have been charged a higher rate because the dealer earned a commission from the lender.
You can take action in several ways:
- Make a complaint to the Financial Services and Pensions Ombudsman (FSPO)
The FSPO is an independent body that deals with complaints against banks and finance companies. It’s free to use and doesn’t require going to court. The Ombudsman can award up to €500,000 if it finds you were treated unfairly or misled. - Take legal action
You may be able to bring a claim for misrepresentation (being given false or misleading information) or for unfair or undisclosed commissions that broke consumer-protection rules. In plain terms, if you were sold finance on the basis of trust, and weren’t told that the dealer earned extra money by raising your rate, you may be entitled to recover the overpayment. - Join a group claim
New laws allow approved consumer organisations to take collective actions on behalf of groups affected by the same issue. If many Irish borrowers were impacted by similar commission practices, this could lead to large-scale redress in the future.
Why This Matters
UK lenders are already putting aside huge sums. Bank of Ireland UK alone has reserved €400 million to repay customers overcharged through hidden-commission schemes.
The same sales model was used here in Ireland before mid-2024. The forthcoming UK Supreme Court ruling will likely set a benchmark for how similar cases are viewed by Irish regulators and courts.
Our View
The message from regulators is clear: consumers must be treated fairly and given full information. If your car dealer or finance company failed to tell you about a commission that affected your interest rate, you could be owed money back.
At Anthony Joyce & Co. Solicitors, we help people understand their rights and claim compensation for mis-sold or unfair finance deals. We can review your finance agreement and tell you if you have a case, whether through the FSPO or through the courts.
If you arranged car finance and were not told that the dealer was paid a commission by the lender, get in touch. You may be entitled to redress.
Contact:
Anthony Joyce & Co. Solicitors
Augustine House, Oliver Bond Street, Dublin 8
+353 (0) 1 270 9871
