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What Are Hidden Commissions?

Hidden commissions arise when an agent, introducer, or finance broker facilitates the sale of a loan or finance agreement from a bank or lender. In the context of car finance, it could be the car salesperson or dealership orchestrating the finance deal.

If the car salesperson receives a fee or commission for brokering the car finance deal with the bank, without the bank informing you of this transaction, it qualifies as a hidden, secret, or undisclosed commission. The finance provider or bank is obligated to disclose all fees involved in the transaction.

The simplified process unfolds as follows: You ➔ Car Dealership/Salesperson ➔ Hidden £££s ➔ Finance Provider/Bank

Even a generic statement like "a commission may be paid in certain circumstances" falls short. The car dealership must explicitly inform you, at the point of the car sale, of the commission's amount. Failure to do so constitutes a form of fraud, making both the finance provider and the finance broker potentially liable for claims.

In fulfilling their responsibilities, financial brokers, such as car dealerships, owe certain duties to their clients, including:

Always act in the interest of the customer.

Avoid loyalty to any specific bank, lender, or finance provider.

Disclose any profits made to the customer.

Steer clear of conflicts of interest, such as charging higher interest rates for increased commissions.

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