Close Brothers Motor Finance was one of the UK's best-known specialist vehicle lenders, and its name features frequently in conversations about discretionary commission arrangements (DCAs) and mis-sold car finance.
If you took out a PCP or Hire Purchase (HP) agreement through a dealership or broker that was funded by Close Brothers between April 2007 and January 2021, the interest rate on your agreement may have been set in a way that was not properly disclosed to you. This is the basis of most car finance complaints involving Close Brothers.
This guide explains who Close Brothers Motor Finance is, how DCAs may have affected customers, whether you could be eligible to raise a complaint, and how to go about doing that. For a broader introduction to how PCP and HP complaints work, see our guide: What Is a PCP Claim and Who Can Make One?
Who Is Close Brothers Motor Finance?
Close Brothers Motor Finance is a division of Close Brothers Group plc, a UK merchant banking group listed on the London Stock Exchange. The motor finance arm has operated for more than 30 years and worked with thousands of car dealerships and brokers across the UK, providing PCP, HP, and conditional sale agreements to customers buying new and used vehicles.
Unlike some of the larger high street lenders, Close Brothers Motor Finance operated as a specialist vehicle funder, meaning it developed long-standing relationships with dealer networks. Customers would generally encounter Close Brothers products at the point of sale, with the dealer presenting a finance proposal as part of the overall purchase. The lender itself typically had little or no direct contact with the customer during the sales process.
This model placed the dealer in the role of a credit broker, and it is that broker relationship, and specifically the commission arrangements that existed within it, that form the basis of the complaints now being raised.
How Discretionary Commission Arrangements Affected Close Brothers Customers
During the period in question, Close Brothers Motor Finance, like many other lenders, permitted dealers to set or adjust the interest rate on a customer's finance agreement within a defined range. The commission the dealer received was linked to the rate chosen. A higher rate meant more commission for the dealer, and the customer had no way of knowing this was happening.
CITED EVIDENCE
The FCA's 2019 motor finance review found that discretionary commission arrangementscreated an incentive for brokers to increase the cost of credit for customers, often without adequate disclosure. The FCA subsequently banned DCAs with effect from 28 January 2021.
Source: Financial Conduct Authority, Motor Finance Review, 2019. Available at: fca.org.uk
From a consumer's perspective, this meant the rate offered was not necessarily a reflection of your credit profile or financial circumstances. It could have been influenced by what the dealer stood to earn. Customers who had similar financial backgrounds to others could end up paying more simply because the dealer chose to apply a higher rate.
The absence of disclosure is the key issue. Under FCA rules, brokers and lenders have obligations to treat customers fairly and to disclose conflicts of interest. If the dealer received a commission that was linked to the interest rate, and that commission was not clearly explained to you, there may be a basis to raise a complaint.
To understand more about how DCAs worked across the market, read our guide: Discretionary Commission Arrangements (DCA) and Mis-Sold Car Finance Explained
Am I Eligible to Make a Close Brothers PCP Claim?
Eligibility for a Close Brothers car finance complaint generally depends on the same criteria applied to other DCA claims across the market. There is no universal eligibility test, and each case is assessed on its own facts, but the following questions are a useful starting point.
- Did you take out a PCP or HP agreement that was funded by Close Brothers Motor Finance between 6 April 2007 and 27 January 2021?
- Was the agreement arranged through a car dealership or a motor finance broker rather than directly with Close Brothers?
- Were you clearly told at the time of the sale that the dealer was receiving a commission, and that this commission was linked to the interest rate you were being charged?
- Was the finance appropriate for your financial circumstances at the time of the agreement?
If you were not given a clear explanation of the commission arrangement, that is potentially a relevant failing. You do not need to have the original finance documents to start the process. Close Brothers Motor Finance, as a regulated lender, should be able to provide copies of your agreement on request.
It is also worth knowing that you can complain whether the agreement has been paid off, whether the car was handed back, or whether you are still making payments. Past settlement of an agreement does not remove your right to raise a concern.
For the full list of eligibility criteria and how they are assessed, read: Are You Eligible for a PCP Refund? Key Criteria Explained
What Could a Successful Claim Result In?
No one can guarantee what the outcome of a complaint will be before the facts of your case have been assessed. The result will depend on the specific circumstances of your agreement, including whether a DCA applied, what rate you were charged, and how far your circumstances deviated from what you should reasonably have been offered.
Where complaints of this kind have been upheld in the past, the aim of any remedy has generally been to put the customer in the position they would have been in had the agreement been sold correctly. Outcomes have included:
- A refund of excess interest paid because of the inflated rate
- Reduction of any outstanding balance on a live agreement
- A payment representing the difference between the rate charged and a fair rate
The FCA's ongoing review of the motor finance market means the broader picture for consumers is still developing. We will continue to update our guidance as new information becomes available.
You can read more about the claims process at our How It Works page.
How to Make a Close Brothers Car Finance Complaint
There are two routes open to you if you believe your Close Brothers finance agreement was not sold fairly. You can raise the complaint yourself directly with the lender, or you can use a regulated claims management company to manage the process on your behalf.
Complaining directly to Close Brothers Motor Finance
You have the right to raise a formal complaint with Close Brothers Motor Finance at no cost to you. Put your complaint in writing and include the details of your agreement, the dates it ran, the name of the dealership, and the specific concern that the commission arrangement was not properly disclosed. Close Brothers has eight weeks from receipt of the complaint to provide a final response. If they reject your complaint or do not respond within eight weeks, you can refer the matter to the Financial Ombudsman Service (FOS), which will assess the complaint independently and free of charge.
Using a regulated claims management company
A regulated claims management company (CMC) can handle the complaint on your behalf, from reviewing your case, preparing the complaint, and liaising with Close Brothers, through to any referral to the Financial Ombudsman Service if needed. CMCs charge a fee for this service, which is usually a percentage of any redress received if the complaint is successful. PCP Missold Ltd is authorised and regulated by the FCA (FRN 1037114) to carry out claims management activities.
What information will I need?
Whether you complain directly or through a CMC, it helps to have as much of the following to hand as possible:
- Your name and address at the time of the agreement
- The name of the dealership where the car was purchased
- The approximate dates the agreement ran
- Any paperwork you have, including the finance agreement itself
If you do not have your original documents, do not let that put you off. Lenders are generally able to retrieve agreement records from their systems when a complaint is submitted.
For a full walkthrough of what to expect during the complaint process, visit our How It Works page.
Frequently Asked Questions
Can I still make a Close Brothers PCP claim if my agreement has ended?
Yes. Settling or ending a finance agreement does not prevent you from raising a complaint about how it was sold. Provided the agreement falls within the relevant period and commission was not properly disclosed, a complaint can still be made. Many upheld complaints have related to agreements that were fully paid off years ago.
Close Brothers rejected my previous complaint. Can I still pursue it?
If Close Brothers rejected your complaint and you did not refer it to the Financial Ombudsman Service, it may still be possible to do so depending on the timeframes involved. The FOS has been dealing with a significant volume of motor finance cases, and the FCA's ongoing review may affect how individual complaints are handled. We would recommend checking your options before assuming the matter is closed.
Will making a complaint affect my relationship with Close Brothers?
Raising a formal complaint is a regulated process and should not affect any existing credit arrangement you hold. If you currently have an active finance agreement with Close Brothers, raising a complaint about a past agreement should be treated as a separate matter. The lender is required under FCA rules to handle your complaint fairly and without detriment to your existing relationship.
How long does a Close Brothers car finance complaint take?
Close Brothers has eight weeks to respond to your complaint. If the matter goes to the Financial Ombudsman Service, the timeline is longer, as FOS cases can take several months or more depending on caseload and complexity. Keeping thorough records of all correspondence will help throughout the process.
Do I need a solicitor to make a Close Brothers PCP claim?
No. You can raise the complaint yourself directly with the lender and then the FOS at no cost. A solicitor or claims management company is not required. Some people prefer to use a CMC or solicitor to avoid dealing with the process themselves, but it remains entirely optional.
Key Takeaways for Close Brothers Customers
If you had a PCP or HP car finance agreement that was funded by Close Brothers Motor Finance during the period covered by the FCA's review, it is worth considering whether the interest rate on your agreement was influenced by a discretionary commission arrangement that was not disclosed to you.
The key points from this guide are:
- Close Brothers operated a dealer-led model where DCAs were in use
- Commission linked to your interest rate may not have been disclosed at the time of sale
- You can raise a complaint whether your agreement is settled, ongoing, or ended early
- Complaints can be made directly to Close Brothers, or via the FOS, at no cost
- You do not need your original paperwork to begin the process
