If you took out a car finance agreement with MotoNovo Finance, or its parent company FirstRand Bank, between April 2007 and January 2021, you may have been one of many customers affected by discretionary commission arrangements (DCAs). MotoNovo was one of the UK's largest providers of motor finance, and like many lenders operating during that period, it allowed car dealers to set the interest rate on finance agreements. That arrangement created a situation where dealers had a financial incentive to charge customers more, without being required to disclose that conflict of interest. The Financial Conduct Authority (FCA) banned DCAs in January 2021 following a review that found the practice resulted in customers paying significantly more for their finance. The FCA has since been investigating the scale of potential harm to consumers across the industry.
This article explains what MotoNovo PCP claims are, who may be affected, and what you can do if you think your agreement was not sold fairly. For a broader overview of how PCP claims work, you can read our guide: What Is a PCP Claim and Who Can Make One?
Who Is MotoNovo Finance?
MotoNovo Finance was one of the UK's most active motor finance lenders during the 2010s, providing Personal Contract Purchase (PCP) and Hire Purchase (HP) agreements to customers buying new and used cars. The business operated as a subsidiary of FirstRand Bank, a South African financial institution with a significant UK presence.
MotoNovo worked primarily through a network of car dealerships and brokers rather than dealing with consumers directly. Customers would typically encounter MotoNovo's products at the point of sale, with the dealer presenting a finance package as part of the car purchase process.
This dealer-led model was common across the motor finance industry at the time, and it is central to the current wave of complaints. Because dealers were acting as credit brokers, they had a role in the finance process, and in many cases, the commissions they received were not made clear to customers.
How Discretionary Commission Arrangements Affected MotoNovo Customers
A discretionary commission arrangement gave dealers the ability to adjust the interest rate on a customer's finance agreement within a range set by the lender. The higher the interest rate the dealer chose, the more commission they received. The customer was typically unaware that this was happening.
CITED EVIDENCE
The FCA's review found that the use of discretionary commission arrangements in motor finance led to customers paying higher interest rates than they would have otherwise. The FCA concluded that lenders and dealers had not acted in customers' best interests.
Source: Financial Conduct Authority, Motor Finance Review, 2019. Available at: fca.org.uk
For MotoNovo customers, this means that the finance rate on your agreement may have been set by the dealer with their own commission in mind, rather than reflecting the most appropriate rate for your financial circumstances. Under FCA rules, both lenders and credit brokers are expected to act in the customer's best interest and to disclose any conflict of interest.
The lack of transparent disclosure meant that many customers had no way of knowing whether the rate they were offered was fair. The FCA formally banned DCAs in January 2021, which itself acknowledged that the practice was harmful.
For more background on how DCAs worked and why they led to complaints, see our full guide: Discretionary Commission Arrangements (DCA) and Mis-Sold Car Finance Explained
Am I Eligible to Make a MotoNovo PCP Claim?
You may be able to raise a complaint about a MotoNovo car finance agreement if your circumstances fit within the criteria the FCA and the Financial Ombudsman Service have been applying to these cases.
The key questions to consider are:
- Did you take out a PCP or HP agreement with MotoNovo Finance between 6 April 2007 and 27 January 2021?
- Was your agreement arranged through a car dealership or a broker, rather than directly with the lender?
- Were you told clearly, at the time of the agreement, that the dealer would receive a commission and that this could affect the interest rate you were offered?
- Was the finance agreement suitable for your financial situation at the time?
If you cannot answer yes to the disclosure question, there may be grounds to raise a complaint. A lack of proper disclosure around commission is at the heart of most DCA complaints. You do not need to have the original paperwork to begin the process, as lenders are generally able to provide copies on request.
It is also worth noting that you can make a complaint whether or not you have already paid off the agreement, whether the car was returned under the voluntary termination provision, or whether you are still making payments.
For a full breakdown of the eligibility criteria, read our article: Are You Eligible for a PCP Refund? Key Criteria Explained
What Could a Successful Claim Result In?
The potential outcomes of a PCP or HP complaint vary depending on the individual circumstances of your agreement. No claims management company, solicitor, or other adviser can guarantee a specific outcome, and any assessment of what you might receive can only be made once the facts of your case have been considered.
That said, where complaints have been upheld in cases involving undisclosed or unfairly high commissions, the general aim of any remedy is to put the customer back in the position they would have been in had the agreement been sold correctly. In practice, this has included outcomes such as:
- A refund of excess interest paid as a result of the inflated rate
- Reduction of an outstanding finance balance
- A cash payment representing the difference between the rate offered and a fair rate
The FCA is overseeing a wider review of the motor finance market, and further developments regarding industry-wide redress are expected. We will update our guidance as those processes develop.
You can read more about how the complaints process typically works on our How It Works page.
How to Start a MotoNovo PCP Claim
There are two ways to raise a complaint about a MotoNovo car finance agreement. You can do so directly with the lender, or you can use a regulated claims management company to manage the process on your behalf.
Complaining directly to MotoNovo / FirstRand Bank
You have the right to raise a complaint with MotoNovo directly and free of charge. You should put your complaint in writing, setting out the basis of your concern, the dates of the agreement, and the fact that you were not clearly informed about how commission affected your interest rate. The lender has eight weeks to respond. If they reject the complaint or do not respond within that time, you can refer the matter to the Financial Ombudsman Service (FOS) for an independent assessment, also free of charge.
Using a claims management company
If you would prefer to have your complaint handled on your behalf, a regulated claims management company (CMC) can review your circumstances, communicate with the lender, and manage any referral to the Financial Ombudsman Service if needed. CMCs charge a fee for this service, typically taken as a percentage of any redress received. PCP Missold Ltd is authorised and regulated by the FCA (FRN 1037114) to carry out claims management activities.
To understand the full complaints journey, visit our How It Works page.
Frequently Asked Questions
Can I still make a MotoNovo PCP claim if I have already paid off my agreement?
Yes. Paying off your finance agreement does not prevent you from raising a complaint about how it was sold. What matters is whether the agreement fell within the qualifying period and whether commission was properly disclosed at the time. Many successful complaints have related to agreements that are fully settled.
Does MotoNovo Finance still exist?
MotoNovo Finance was a trading name of FirstRand Bank Limited. The brand has since been repositioned, but complaints about agreements from the qualifying period can still be raised. If you are unsure who to address your complaint to, the Financial Ombudsman Service and the FCA register can help you identify the correct entity.
Will making a complaint affect my credit score?
Raising a complaint about a mis-sold finance agreement does not in itself affect your credit score. If the outcome of your complaint involves a change to your existing agreement or outstanding balance, your lender should confirm the credit implications at that stage.
How long does a MotoNovo PCP claim take?
Lenders have eight weeks to respond to a formal complaint. If the matter is referred to the Financial Ombudsman Service, it can take considerably longer, depending on their caseload and the complexity of the case. We would recommend keeping records of all correspondence throughout the process.
Do I need to use a claims management company?
No. You are entitled to complain directly to MotoNovo or FirstRand Bank and to the Financial Ombudsman Service at no cost. A claims management company may be useful if you prefer not to manage the process yourself, but their use is entirely your choice.
