Definition
Commission disclosure in motor finance refers to the requirement for dealers to clearly explain how they are paid when arranging finance for customers.
This includes:
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The existence of commission
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The nature of commission
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Whether commission varies based on interest rate
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Any financial incentive that could influence the recommendation
Why Commission Disclosure Matters
Following the FCA’s review of discretionary commission arrangements (DCAs), transparency has become central to consumer trust and regulatory compliance.
Dealers must demonstrate:
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Fair value
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Transparent communication
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Clear documentation
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No hidden influence over interest rates
What Dealers Should Be Doing Now
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Review commission structures
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Ensure documentation clearly explains remuneration
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Train sales teams to confidently explain finance
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Avoid vague language like “we may receive a fee”
Example Explanation for Customers
“We may receive commission from the lender for arranging your finance. This does not affect the price of the vehicle and the lender determines your interest rate based on your credit profile.”
Key Takeaway
Clear disclosure protects:
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The customer
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The dealership
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The lender relationship
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Long-term reputation
Transparent dealers win repeat business.
