UK drivers who have signed car finance agreements with MotoNovo Finance are now re-examining their contracts after facing extra fees and higher charges, thanks to the Financial Conduct Authority’s review of motor misselling.

With this, individuals who are looking for ways to recover their money are given a chance to receive compensation for their losses. This article will walk you through the facts, qualifications, and process of submitting a MotoNovo Finance claim. Keep reading.

Who Can Claim a Refund?

If you are wondering, “Can I claim against MotoNovo Finance?” The answer is yes. All consumers who entered into car finance deals with MotoNovo between 2007 and 2021 may be eligible for a MotoNovo refund. 

The agreements could pertain to different types of vehicles like cars, vans, campervans, and motorcycles.

Keep in mind that eligibility covers cases where the consumer was not sufficiently made aware of every fee or charge. This can include discretionary commission arrangements (DCAs) between the finance provider and the broker, as well as other hidden charges. 

Eligibility for Claims

Remember that eligibility includes situations in which the customer was not adequately informed of all fees and charges. This can include other unstated fees, including discretionary commission agreements (DCAs) between the broker and the finance provider.

The most telling signs are mis-selling, confusing agreements, pressure to spend more, hidden fees and commissions, unexpected interest rates, and dishonest advertising. 

Inaccurate or insufficient information concerning your financing agreement, such as the cost of credit or optional extras, may entitle you to a refund.

If there were any unstated costs or taxes in the contract you signed, you might also be eligible for a refund. This covers any expenses that were unclearly mentioned or concealed in the fine print. 

It could also be grounds for a claim if you were marketed a product that did not fit your financial circumstances, such as a high-interest loan, even if you signed a joint agreement without being fully informed of its terms or the entire cost. 

Here are some guide questions to help you identify your eligibility.

• Did your dealer fully explain the agreement details, including costs, interest rates, and payment terms?
• Were you offered every financing option that suits your financial means?
• Were you pressured into getting a deal that does not fit your current economic situation?
• Were you made to feel compelled to buy extra services, like insurance, warranties, and accessories that you did not need?
• Upon starting to pay your dues, were there any fees or charges not mentioned when you signed the agreement? Were these included in the contract?
• Did the interest rate turn out to be higher than you expected?
• Were the promotional materials you received overly optimistic or inaccurate based on the actual terms?
  

Why MotoNovo Finance Refunds are Being Issued

The root of these refunds lies in a review of the commission arrangements used by various motor lending companies throughout the years. The FCA found that some consumers were charged extra on their contracts, including hidden commissions. 

Long-Term Financial Effects on Consumers

For customers, deceptive financing agreements can result in serious long-term financial difficulties. 

People frequently find themselves mired in mounting debt when they are misinformed about the specifics of their financing, whether as a result of imprecise terms or hidden commissions. 

They may wind up paying significantly more than they had anticipated, which will keep them stuck in a vicious loop.

Because of this, the situation causes more than just immediate financial strain, resulting in:

• Increasing debt
• Emotional distress
• Loss of assets
• Disruption of long-term goals

Wider repercussions for the car finance sector

In addition to harming individuals, mis-sold financial agreements also negatively impact the auto finance sector as a whole. The industry suffers when trust is damaged. As consumers grow more wary and less inclined to interact with auto finance providers, market activity and sales may decline.

Regulatory bodies like the FCA will probably act and enforce more stringent regulations and oversight if the volume of complaints rises. 

Misselling-related businesses have a damaged reputation, which makes it harder to draw in new clients and keep hold of current ones. For many organisations, regaining the trust of their clients is an expensive and time-consuming undertaking.

Court-Issued Legal Foundation

The most significant development regarding car financing was the Court of Appeal’s decision, which was more favourable toward consumers.

On 25 October 2024, the court issued a ruling on three landmark cases against major providers, two of which involved Firstrand Bank Ltd, trading as MotoNovo Finance.

Andrew Wrench and Marcus Johnson both filed separate charges against the company, alleging undeclared commissions. Mr. Johnson was unaware that his dealer was paid £1,650.95 under his contract, and Mr. Wrench was not given enough commission explanations. 

The court ruled that the absence of specific disclosure precluded the customer from providing informed consent, which violated the lenders’ and dealers’ fiduciary duties.

The ruling expanded and strengthened the protections given to drivers through existing consumer protection laws. Moreover, it established these additional regulations as a law that car finance firms are required to follow. 

However, keep in mind that the lenders involved in the three landmark cases have filed motions for appeal to the Supreme Court. The highest court’s decision will determine whether these rules will remain or will be repealed. 

Other Legal Actions and Consumer Rights

The FCA already banned DCAs back in January 2021, years before the court’s decision. This action was based on the Financial Services and Markets Act 2000. The watchdog is conducting an ongoing review to further examine and correct harmful lending practices. 

Aside from this, drivers’ rights are protected by the Consumer Rights Act 2015, the Consumer Protection from Unfair Trading Regulations 2008, the Consumer Credit Act 1974, and the FCA Consumer Credit Sourcebook.

What Compensation Could You Receive?

Financial analyst Martin Lewis believes that the FCA’s move could lead to significant refunds for millions of affected consumers, comparable to claims regarding earlier Payment Protection Insurance cases. 

The size of the problem is illustrated by industry expert predictions that total compensation might vary from £6 billion to £16 billion.

You should be aware that the Financial Ombudsman Service has issued laws requiring businesses to pay clients who have received unfair treatment. 

A lot of essential elements influence refund amounts, and understanding these characteristics is critical to estimating how much you may get. 

One crucial issue is the car’s value. Higher-priced vehicles tend to attract higher compensation due to higher financing costs. Another consideration is the length of the financing arrangement, as longer contracts typically include more overpayments.

What This Means For You

According to the FOS, it can compel the provider to reverse the damage by paying monetary compensation to cover the financial loss, by paying money to acknowledge the impact of the malpractice, or by giving compensation without using money.

So, is MotoNovo refunding mis-sold contracts? Yes! The Ombudsman can order a firm to pay for financial losses, add interest on the refunded amount, or cover extra costs incurred by the customer. Non-monetary damages, such as stress or inconvenience, might also be included in the calculation.

Interest may be added at a rate of 8% simple interest per year for the time you were without your funds. 

How Compensation is Calculated

Your entitlement to compensation is determined by the FOS using a comprehensive methodology that considers a variety of factors. 

The total overpayments, or the difference between what you paid throughout the length of the loan and what you would have paid if the terms had been acceptable, are one important aspect. This covers any exaggerated expenses or unstated fees.

Overpayments of interest, which are based on the discrepancy between the rate you were charged and the average market rate for comparable loans, are another important factor.

If you paid a higher-than-average interest rate, it could greatly affect the amount of compensation. For example, being charged an extra 5% interest over five years could result in thousands of pounds in overpayment that would be refunded to you. 

How to File a Claim Against MotoNovo Finance

If you plan to file a claim, you need to consider a few key points. One should reduce any problems by following the guide below.

A Step-By-Step Guide to Filing a Complaint

 1. Gather Your Information

Before you begin your complaint, gather all the documents and details related to your financial agreement. 

This covers your full name, contact information, policy or account number, the signing date, and your vehicle’s details, such as make, model, and registration. It is also wise to keep any messages exchanged with MotoNovo Finance, as these can support the claim.

2. Contact MotoNovo Finance

You need to get in touch with MotoNovo Finance using their phone, email, or website form, if available. You should clearly explain the issues encountered with the contract, describe its effects, and attach any evidence.

The written note must also state the result expected, such as a refund or other form of payment.

3. Wait for a Written Response

After you have submitted your complaint, wait for the firm to reply within the set period. One might receive a written answer that explains why a complete reply is not possible right now and indicates when a final decision will be given.

4. Obtain a Final Response

The last correspondence you should receive from the provider is the final response. It would state the type of remedy recommended by MotoNovo Finance.

5. Consider MotoNovo’s Recommendations

This is the time when you should weigh the value of your contract and its impacts against the offer. 

If you find it fair, you can go ahead and express your agreement and work with the firm to settle the matter. However, if their reply does not resolve your issue, prepare to take the next step. 

6. Escalate Your Complaint to the FOS

If you are not satisfied with their response or you do not hear back from them within the prescribed timeframe, this is when you may forward your complaint to the FOS. 

Their free service is accessible via their website. You just need to complete their form, including all the necessary details and documentation. 

7. Review the FOS’s Recommendations

The Ombudsman will assess your case and may ask for more information while communicating with MotoNovo. They aim to resolve your complaint fairly. If it rules in your favour, they will instruct the firm to compensate you. 

Keep in mind that accepting their decision may limit any further legal steps in the resolved case. 

8. Consider Legal Advice

If your situation involves complex issues or you plan to take further action, seek independent legal advice. This is useful if you think a court action might be needed.

MotoNovo Finance Refund Timelines

Recent guidelines released by the financial regulator have set out the timeframes for resolving claims. Here are some of the most essential dates and periods you need to remember:

• 8 Weeks

This is the standard waiting period for a response from MotoNovo after your initial complaint. 

• 15 Months from Filing

Consumers have up to 15 months from the date they first file a complaint to escalate it if needed.

• 1–3 April 2025

The Supreme Court considered appeals concerning the Court of Appeal's ruling on hidden car finance commissions. Whether existing consumer protections remain or change will depend on this judgment.

• May 2025

FCA continues to review motor finance industry and will outline next steps in its investigation.

• By July 2025

The Supreme Court is expected to release its ruling. Following this, the FCA will likely issue updated regulatory guidance and announce whether a widespread redress scheme will be implemented.

• Until 4 December 2025

Financial businesses currently dealing with complaints are given a small reprieve by giving them until after 4 December 2025 to reply to these complaints.

• July 2026

If you have not filed your complaint with the FOS, you have until July 2026 to do so. 

Factors that Influence the Claims Process

The following essential steps are typically included in the claims process:

• Filing
• Investigation
• Final decision

The time it takes to settle a claim, however, might be influenced by additional factors. The intricacy of a case, for example, influences how long it takes to process claims that involve important legal concerns or a lot of documentation. 

Throughout the claims process, it is critical to constantly contact MotoNovo Finance and the FOS. Follow-ups are essential for addressing delays and ensuring that your claim is processed quickly. 

To avoid unnecessary delays and ensure that your claim is handled without extra issues, you must be proactive and careful in remembering important dates. 

Next Steps for Affected Consumers

Submitting your complaint is just the start. Pay close attention to any reply from MotoNovo. The goal is to secure a final response that offers a favourable remedy, so if you do not get a reply or the redress you are looking for, you can bring your case to the FOS. 

If you face challenges such as a serious illness, be sure to inform your provider when filing a claim. In fact, letting them know about any special issues may influence how your case is handled.

The FOS will review your complaint and share details with you and MotoNovo. Nevertheless, do not forget to follow up on your complaint to know how the case is going. 

Conclusion

Consumers who have been charged hidden commissions and extra fees on their car finance deals now have a way to claim MotoNovo compensation. The process has been clarified by regulatory reviews and court cases, giving you the edge you need to file a case.

You have a strong chance of getting your money back if you know your rights and take the necessary actions. Taking action right away could help you get your money back if you think you were overcharged.