Updated: 10 September 2025

Originally Published: 22 March 2025

Close Brothers, one of the UK's largest car finance lenders, has recently faced scrutiny amid growing concerns about industry-wide mis-selling practices. The integrity of car finance agreements is under serious question following the Close Brothers Finance scandal, which has prompted many customers to seek refunds for potentially unfair terms.

These issues are particularly related to undisclosed commissions, loan costs, and misleading loan terms. If you think you have been mis-sold an agreement that you got from Close Brothers, it’s time to file for a refund. Here, we’ll guide you and explain the eligibility for refunds, what causes mis-selling, and the steps you need to take to claim compensation. 

Why Are Customers Seeking Refunds?

Owing to the awareness generated by persons and customer groups, car finance customers are now realising the need to check their agreements and consider whether they have also been mis-sold, like the ballooning number of customers that have lodged their complaints. Add to these the various mis-selling allegations that have been reported, which emanates from excessive interest rates, hidden commissions and loan terms that were not explained or mis-explained. 

How Many People Are Affected, and What Has the FCA Said?

Thousands of customers have been hit by the Close Brothers scandal, with many drivers now being entitled to a Close Brothers refund. Unfair consumer practices are now being investigated by the Financial Conduct Authority (FCA). FCA also reminded financial institutions to ensure full transparency in their loan agreements to avoid these issues arising again. At the same time, FCA urges consumers to come forward should they think they have been affected as well. Records also indicate that due to the number of affected individuals, there’s a huge possibility that the Close Brothers’ Finance car finance portfolio will be impacted. 

Why Are Close Brothers Finance Claims Happening?

The main reason behind Close Brothers finance claims is the central issue and allegation that the UK lender violated the terms of a car finance agreement by not providing full, transparent information about key elements such as interest rates, loan terms, and commissions. Customer reports also showed that they were unaware of how the finance was structured, which also led to an inflated cost of borrowing.

The Role of Discretionary Commissions in Inflated Loan Costs

Discretionary commission agreements are among the key factors in the car finance scandal. Finance providers paid commissions to dealers for arranging loans which were mostly unfair ones. What’s worse is that most of these commissions were undisclosed to customers, which caused mis-selling. The cost of the loan was higher than it should have been, as dealers will tend to charge higher interest rates, or ones that aren’t fitting to the borrower anymore. 

This practice prioritises the interest of the dealer rather than the lender, compromising the financial standing of the customers. Also, the lack of transparency regarding commissions means customers may have been paying more than they should have for their car finance.

The Role of FCA

The Financial Conduct Authority (FCA) plays a crucial role in the industry of car financing, as it is a regulatory body that has actively been involved in investigating financial situations to ensure that customers who have been victims of mis-selling and unfair practices will receive the appropriate compensation. 

FCA has been key in giving the confidence to consumers to check their agreements and go ahead with their claims in spite of how drawn-out and labourious the procedure may be.

• The Supreme Court Ruling

On 1 August 2025, the Supreme Court issued a judgement [1] that will shape the handling of claims against Close Brothers Finance and other lenders in the future. Of the three test cases that were taken from the Court of Appeals, only the claim by Marcus Johnson was upheld. 

The Supreme Court held that in Mr Johnson's case, the rate of interest had been artificially increased by non-disclosed commissions, making the overall deal unfair under the Consumer Credit Act. 

The burden is now on regulators and the wider finance industry to ensure that Close Brothers Finance customers who were subject to these practices are treated fairly. In this case, the FCA responded by stating that it will publish a redress scheme consultation [2] which will set out details of how the UK-wide compensation scheme will work. The consultation will run for approximately 6 weeks, with final redress rules expected in early 2026. This means that it is now unlikely that we will see any redress payments until later in 2026.

Equipped with new information about car finance claims in the UK, Close Brothers clients may be able to reclaim excessive overpayments due to unfair lending.

Who Can Claim a Refund?

Everyone who has been mis-sold a car finance agreement by Close Brothers Finance is entitled to a refund, with no exceptions. So if you’ve been mis-sold, then don’t worry, as you can make a claim. Here are specific eligibility criteria that will help you determine if you are subject to mis-selling. Check your loan agreement for any of the following issues. If any of them are present, then you may be eligible for a Close Brothers claim. 

1. Hidden Commissions in Finance Agreements

Discretionary commissions are the main culprit behind the Close Brothers Finance mis-sold agreements. These discretionary commissions are payments that have been made by lenders like Close Brothers Finance to car dealers in lieu of arranging the car finance deals in their favour. What usually happens here is that the lender offers car dealers commissions to urge them to get the agreements via their financing, regardless of whether it is affordable for the buyer or is the best financial option for them. 

Typically, these commissions are a percentage of the loan amount, or it can be a fixed sum paid to the dealer for every finance contract they will be able to close. This commission rate, however, is often not discussed with the customers, as this can put malice behind how much they are being charged. Chances are you’re paying more than your loan brought about by the increase the interest brings. 

How Do They Impact Your Loan?
With commission being paid to the dealer, this can have a huge impact on the terms of your car finance agreement, specifically inflated interest rates. However, the key issue still is that these commissions were hidden, meaning you were intentionally uninformed, nor were you given the opportunity to consider their impact on the loan’s cost.

How to Check for Hidden Commissions

• Check your loan agreement carefully, especially the interest rate. In case the interest is higher than you’ve anticipated, immediately tap the dealer and have them explain why the rate was set the way it was, as it could be due to hidden commissions.  
• Be upfront with Close Brothers Finance or your dealer, and ask whether any commission was paid as part of the finance agreement, and ask or assess yourself how it must have impacted your finance agreement. 

2. Misleading Loan Terms That Weren’t Fully Disclosed

Since car financing is a whole different concept, there can be loan terms that you may find confusing. Unfortunately, some dealers take advantage of this, and rather than explain the terms correctly, you will be misled into believing these terms are something else. Misleading loan terms can include the total cost, repayment schedule, and interest rate, which, when not explained properly to you, can lead to an ultimately different decision. 

There are also cases where the lender may deliberately provide you with confusing information so the loan will seem more affordable or appealing, and you should pay attention to this.

How Do They Impact Your Loan?

When key details about the loan are not properly disclosed, or you were misinformed on the true cost of your loan over time, then this constitutes to mis-selling. Being led to believe a term means one thing when it means another can be crucial in your decision-making process. Also, not knowing correctly how much real interest you’re paying can cause more expensive deals than they should be. Practices that deprive you of the opportunity to make an informed decision about your financing options. 

How were you affected?

• Hidden Fees or Charges like processing fees, insurance charges, and early repayment penalties can make your car financing more expensive and put you in financial distress.   
• Ambiguous Loan Terms happen when you enter into a contract that isn’t financially right for you. This often happens if the terms of the loan agreement aren’t properly explained to you. 

How to Identify Misleading Loan Terms

• Thoroughly check your loan agreement for terms that may be too vague or difficult for you to understand. Were these terms explained well, and were you given an explanation of how much your total credit will be, the amount of interest you’re paying, and any additional fees that you may incur from the agreement? 
• Did the dealer or lender present the loan as an easy option without explaining how the interest would compound or how it would affect your repayments in the long run?

3. Excessive Interest Rates Due to Undisclosed Dealer Incentives

Close Brothers Finance and other lenders usually give out rewards and bonuses to dealers to encourage customers to take out financing options. Often, these incentives can come in some form of commission or kickbacks. The problem then arises when these dealer incentives cause excessive interest rates, which are passed to consumers. Higher incentives mean high interest rates, which, when left undisclosed, leave buyers paying more. 

How Do They Impact Your Loan?
Dealer incentives put the dealer’s personal interest above yours, which means they may increase your interest rate so they get bigger pay. If this was disclosed to you, you may have made a different decision, as you may not have agreed, considering how much you’ll be affected by the incentive they’re getting. 

While it may seem like you’re getting an affordable deal, if you’re charged an interest rate higher than the original agreement, it can result in excessive payments over what you originally expected.

How were you affected?

• Excessive Interest Rates can make the loan you took out more expensive than it originally was. If you were not told about the incentives that your dealer received, then you may have been mis-sold a loan.
• Unexplained Rate Mark-ups are often a result of dealer incentives, driving up the cost of the loan higher than anticipated. Unfortunately, this markup is also topped up on your total credit cost. 

How to Check for Excessive Interest Rates

• See the average market rate and compare it with your interest rate to gauge whether you were charged excessively high. If you noticed that the rate was higher even without a clear explanation from your dealer or lender, then this could be a sign that there was an undisclosed dealer incentive that influenced the terms of your loan. 
• Review your loan statement and payment schedule. Do you see any oddities? If the rate of interest you were charged seems unusually high given the type of car or term of the loan, ask your lender to explain.

What To Do If You Meet These Criteria?

If hidden commissions, deceptive loan terms and usurious interest rates may sound like your experience, you may be entitled to a refund or other compensation. Here’s what you should do next. 

1. Review Your Loan Documents - Check for any proof or evidence that outlines the issues above.
2. Contact Close Brothers Finance - Given the above criterion, you can now assess whether your loan was mis-sold. You can always complain to Close Brothers Finance if positive.
3. Seek Legal or Ombudsman Help - Should the unfortunate scenario happen that Close Brothers Finance does not resolve your complaint to your satisfaction, you can escalate the issue to the Financial Ombudsman Service or seek the help of a finance claims expert to ensure you are compensated for any mis-selling.

How to Check If Your Loan Was Mis-Sold

• Review your loan documents. Was there any mention of commissions and incentives? If not, they might have been hidden in the clauses of your contract, and you were mis-sold.
• Look for hidden fees and charges that were not fully disclosed at the time of signing.
• Compare the interest rate you have on your loan with the typical rates for similar agreements to see if yours is unusually high.
• No meaningful explanation of the product or costs means you weren't given any clear explanation of how the loan worked or what you'd pay under the agreement. Here, it could be a case of mis-selling.

How Much Could You Get in Compensation?

The amount of compensation you could claim depends on a number of factors, for example how much you borrowed and the level of commission and the extent to which the mis-selling increased your loan costs. The FCA guidance states that the average discretionary commission claim is around £950 per agreement [3]. The precise amount will vary depending on the facts of each case. For some of Close Brothers customers the outcome of this may be only a small refund, for others the sum may be a few thousand pounds. Below is an example of how compensation could be calculated:

Case Study: "How One Consumer Reclaimed £1,981.60 from Close Brothers"

Scenario:
Ms. S took out a Hire Purchase (HP) Agreement with Close Brothers’ Finance in July 2017 [4]. The agreement ran for 49 months, and Ms. S mentioned she was told a balloon payment of £4,000, which is higher than anticipated, was due, so she decided to return the car instead. Right after, she was charged £1,981.60 for having exceeded her agreed mileage allowance. She was unhappy both with the balloon payment, which was different from the amount she had initially agreed upon, and the mileage charge. 

Ms. S filed a complaint to CB and was issued a final response in 2021. 

Reclaimed:
Ms. S's claim resulted in an adjustment of £1,981.60, which was based on the overpayment due to the hidden commission.

Steps to Take If You Suspect You Were Mis-Sold

You might be able to claim compensation on the basis of being mis-sold an agreement by Close Brothers Finance. Follow the steps in this guide to make sure you take the correct procedures in claiming against Close Brothers and follow the steps in a methodical and effective manner:

1. Review Loan Documents

The first step here is to carefully assess all the loan documents that you believe are relevant to your car finance agreement. You’ll be surprised how even the smallest correspondence can be enough proof of mis-selling. Include everything that can prove your transaction, from the loan agreement itself to any correspondence and additional terms and conditions involved during the process. The task which you should perform in this step is the recognition of any differences or ambiguities, particularly on the decisive points such as the interest rates, the repayment conditions, commissions, etc. 

Here are the key areas to look for: 

• Hidden Commissions - Was there any mention of dealer commissions or additional fees? Typical mis-selling scenarios usually involve discretionary commission, which is left undisclosed to you at the time of signing. There’s a high probability that the commission was buried in small print and wasn’t mentioned at all, constituting mis-selling. 
• Unclear terms – Review the agreement again and check for the interest rates, repayment schedule, or any other fees that were involved in the loan. Were the key terms explained properly to you? Was it in a manner you understand correctly? Did your dealer or Close Brother Finance mention any idea of commission, which could impact your total credit cost?

If you find evidence of hidden commissions, excessive interest rates, or any misleading loan terms, these are red flags indicating mis-selling.

2. Check for Discretionary Commissions

Discretionary commissions are one of the main culprits behind mis-sold car finance agreements. The FOS has banned DCAs since 2021 [5]. DCAs are payments that your lender, like Close Brothers Finance, makes to the dealer for arranging the car finance agreement, and they can cause your loan cost to soar. Consumers who were mis-sold weren’t informed of these commissions, leading to an unknowingly higher price on the loan. 

Here are simple ways you can check:

• Make a comparison of your loan amount and its interest rate, and check if it is at par with the market interest rates for similar loans.
• Ask your dealer if included in your agreement and how much it is. Asking your dealer directly gives you a straight answer. 

Should you find out that the dealer received a commission that wasn’t disclosed to you and directly impacted your loan’s interest rate or terms, this could be a solid basis for a mis-sold claim.

3. Contact your Lender to Make a Formal Complaint

In any case that you find evidence of mis-selling, or if you feel that you were unfairly treated in your car finance agreement, then you can start the process and reach out to your lender, or in this case, Close Brothers’ Finance. While this is crucial, as you may feel discouraged to talk to them after the mis-selling, it will allow the lender to investigate your case and potentially resolve it.

To make it easier, here are the important things you should include in your complaint. 

• Clear Evidence – Prepare copies of the loan agreement and any correspondence that will prove there was a mis-selling. This can be any piece of evidence to prove hidden commissions, unclear loan terms, and excessive interest rates. 
• Detailed Timeline of Events and the Case – Provide a clear timeline and summary of the events, including how you believe you were mis-sold. It is where your lender will base, and the more detailed and organised your complaint is, the better chances of a favourable outcome on your end. 

How to Submit a Complaint:

• Online: Finance companies like Close Brothers usually have a website, where they have an online form for complaints. 
• By Phone or Email: You can also contact Close Brothers directly via phone or email and explain your complaint to them. Just ensure to get a written confirmation of your complaint for future reference.

After you submit your complaint, Close Brothers Finance is legally required to investigate your case and respond within a reasonable time frame, usually eight weeks. They may offer you compensation or a resolution if they find your complaint valid. Just take note that financial firms like Close Brothers that receive complaints have the response deadline extended to after 4 December 2025 as per the FCA [6]. This means you can still make a Close Brothers claim now, but most claims are unlikely to progress until after that date.

4. Contact the Financial Ombudsman (If Necessary):

Sometimes, resolving an issue directly with your lender isn't possible, and you may need an intermediary to help escalate your concern. If you're not satisfied with how your lender has handled the case, you can take your complaint to the Financial Ombudsman Service (FOS). They can thoroughly review your dispute and work towards a resolution.

When should you contact the FOS? 

• After Eight Weeks: If you haven’t received a response within the eight-week timeline of submitting your complaint, you can escalate it to the FOS. However, this time frame is currently on a pause as advised by the FCA. 
• Unsatisfactory Response: If you think Close Brothers resolution is not satisfactory to you, such as when they reject your claim or offer a low settlement, the FOS can step in to mediate and determine a fair outcome.

How to Contact the FOS:

• Online: You can file a complaint online on the FOS website. They’ll require details of your complaint and the outcome from Close Brothers Finance, as well as any supporting documents.
• By Phone: You can also contact the FOS by phone to discuss your complaint before submitting it in writing.

What To Do:
Once the FOS takes over, they will investigate your case impartially. If they find it in your favour, they may order Close Brothers Finance to pay compensation, correct the loan terms, or offer other remedies. The FOS’s decision is legally binding, and the lender must comply with it.

5. Seek Advice or Support from a Finance Claims Expert

In some cases, you may find it overwhelming to make the claim yourself, so it would be best to tap a professional help instead. This makes you more confident with your claim, thus informing you on how the entire process works. There are solicitors and claims management companies who specialise in these consumer financial mis-selling cases and can guide you on the process to maximise the chances of receiving compensation successfully. 

Claims management companies are those that specialise in financial mis-selling and can help you gather the necessary documentation, communicate with Close Brothers Finance, and guide you through the FOS process.

If you prefer hiring a professional, then the best advice is to approach a PCP expert or a PCP claims management company that specialises in financial mis-selling claims. Just ensure that they are regulated by the Financial Conduct Authority (FCA) to verify their legitimacy.

Once you’ve identified a claims manager, the next step is to share all the relevant documents and details of your case so they can diligently assess your grounds, and the strength of your complaint. They’ll be able to offer guidance on the next steps, and in many cases, they’ll work on a no-win, no-fee basis, meaning you only pay if you win compensation.

Conclusion

The Close Brothers Finance mis-selling scandal sparked numerous claims and complaints, which only proves how much financial harm it caused to thousands of consumers who believed they were being sold unfairly. While considered a huge firm, it’s no exemption to paying compensation and refunds, as long as the case was mis-sold. In fact, it has already set aside £165M for compensation, considering the huge car mis-selling scandal.

If you, too, suspect you were affected by a Close Brothers mis-sold finance, then take action, as you may be eligible for a refund. 

By reviewing your loan documents, checking for hidden commissions, and following the proper channels to lodge a complaint, you can ensure your case is properly addressed. With the FCA’s involvement, more people are expected to receive compensation as the scandal continues to unfold.

FAQs

Will I get a refund from Close Brothers?

If your car finance was mis-sold to you with hidden commissions and unfair lending from Close Brothers, you may well be entitled to a refund.

How long do Close Brothers claims take? 

Close Brothers claims timescales vary as each case is different. A straightforward Close Brothers complaint could be concluded in a few weeks but if the complaint is more complex and needs to be referred to the Financial Ombudsman, this could take several months.

Do I need a solicitor for my Close Brothers PCP claim?

No, you don’t need a solicitor, but it’s in your best interests to instruct a finance claims expert or use a trusted PCP claims company. This gives you the best chance of receiving the maximum refund available. 

Close Brothers PCP claims are not always simple, as the sale is complex, and so it can be difficult to know whether you’re eligible. Using a trusted and experienced finance claims company can help you get the results you deserve.

What happens if Close Brothers rejects my claim?

If your claim is rejected by Close Brothers, the case can be referred to the Financial Ombudsman, who can rule if you are eligible for a refund due to mis-selling.

_________

References:

1. On 1 August 2025, the Supreme Court issued a judgement - https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf
2. the FCA responded by stating that it will publish a redress scheme consultation - https://www.fca.org.uk/news/press-releases/fca-consult-motor-finance-compensation-scheme
3. the average discretionary commission claim is around £950 per agreement - https://www.theguardian.com/business/2025/aug/04/who-will-get-car-loan-payout-how-much-regulator
4. Ms. S took out a Hire Purchase (HP) Agreement with Close Brother’s Finance in July 2017 - https://www.financial-ombudsman.org.uk/decision/DRN-3726469.pdf
5. The FOS has banned DCAs since 2021 - https://www.fca.org.uk/publication/consultation/cp24-15.pdf
6. financial firms like Close Brothers that receive complaints have the response deadline extended to after 4 December 2025 as per the FCA - https://www.fca.org.uk/news/statements/firms-given-until-december-2025-respond-motor-finance-commission-complaints