Undisclosed Commissions

Introduction

Undisclosed commissions refer to amounts paid—often by a lender, insurer, or product provider—to a broker or intermediary without the full knowledge or explicit consent of the consumer. In many cases, these payments are concealed or not sufficiently transparent within documentation. While commissions themselves are not inherently unlawful, the crux of the matter lies in whether the consumer was made fully aware of the commission’s existence or quantum and whether any conflict of interest was appropriately disclosed. If you have entered into a financial or insurance product without realising a portion of your payments was being channelled as a commission to a middleman, you might have grounds to question the fairness and legality of that arrangement.

From a consumer protection perspective, undisclosed commissions become problematic when they erode the principle of informed consent. If someone sells you a financial product whilst secretly reaping a reward from the provider, there is an inherent risk that the recommendation may have been driven by profit rather than the client’s best interests. This guide explores why undisclosed commissions are an issue, how to spot them, and what you can do to seek redress if they have affected you.

Whether you are dealing with vehicle finance, payment protection insurance, or mortgages, you have a right to transparency regarding fees and commissions. Regulators in the UK, including the Financial Conduct Authority (FCA), have consistently stressed the need for brokers and financial advisers to provide clear information about any remuneration they receive. Courts have also repeatedly indicated that undisclosed commissions can lead to contractual relationships being voidable or entitling the consumer to compensation.

Below, you will find practical steps, references to major legal principles, and guidance on how courts and ombudsman services perceive undisclosed commission claims. By understanding the essentials, you can better identify potential wrongdoing in your agreement or contract and take proactive steps if you suspect you have been short-changed. This guide is intended to be comprehensive but remains a general resource only. It is always advisable to seek personalised legal advice if you think undisclosed commissions have impacted you.

Through the sections that follow, we will delve into each key aspect of undisclosed commission claims. You will learn what to look for in your paperwork, how to evaluate the legitimacy of commissions, and the routes available to you if you decide to dispute a product or agreement on this basis. Whether you are a consumer, business owner, or simply researching your rights, the aim is to equip you with the knowledge and insights to navigate this complex area of law successfully.

This entire guide focuses on the UK consumer market, referencing the laws, regulations, and industry best practices that apply in England, Wales, Scotland, and Northern Ireland. Where specific legal frameworks differ (especially in Scotland and Northern Ireland), the guide outlines important distinctions. Finally, keep in mind that the factual scenarios of undisclosed commissions can be highly nuanced. Even small details in your contract or dealings can significantly affect whether you have a viable claim.

When undisclosed commissions arise in practice

The practice of undisclosed commissions can arise in a variety of financial and insurance transactions. In essence, any scenario where a third party intermediates between a product provider and the consumer carries the potential for commissions—either declared or hidden. These typically include brokers arranging finance deals, insurance policies, extended warranties, add-ons, or other financial products. At times, undisclosed commissions even appear in professional contexts, for example, in consultancy or referral services where the paying client is unaware of a side agreement.

In consumer credit transactions such as car finance and mortgages, lenders often reward intermediaries for directing business their way. This compensation arrangement becomes problematic when the consumer has not been told of the commission, its size, or how it affects the total cost of their loan. Since a broker owes a duty of care to the consumer, failing to disclose a material incentive can breach that responsibility. For instance, if a broker stands to gain more from one lender over another, they might push the borrower toward the higher-commission lender rather than the one that is truly best suited.

Insurance arrangements are another common arena for undisclosed commissions. Insurance brokers who place business with underwriters can receive fees, sometimes called “override commissions,” which are linked to the volume of business they bring. If these fees are hidden or inadequately disclosed, there is a question of whether the consumer’s best interests were subordinated to the broker’s incentive to place as many policies as possible with a particular insurer.

Undisclosed commissions can also arise in smaller-scale consumer contexts. Extended warranties for appliances, mobile phone insurance, or even travel insurance sold through a travel agent might come with a hidden kick-back. The principle remains unchanged: whenever a middleman is rewarded in a way that is not made clear to the consumer, there is potential for an undisclosed commission issue.

In certain commercial transactions, especially business-to-business, undisclosed commissions may arise in service contracts, supply agreements, or procurement deals. However, because consumer protection legislation primarily addresses individual retail transactions, business users often rely on general contract law or specific commercial regulations. Nonetheless, the underlying problem—an intermediary’s divided loyalty—remains consistent across different spheres.

The reason such commissions “fly under the radar” is often down to incomplete or vague descriptions within documentation. Terms like “broker fee” or “administration charge” can mask an actual commission paid to the intermediary. Alternatively, the cost might be rolled into the product’s final price, making it difficult for the consumer to discern exactly how much they have paid. It’s crucial, therefore, to carefully review your agreement, itemised charges, and accompanying documentation. If the documentation is opaque, inconsistent, or does not explicitly break down the intermediary’s remuneration, you may be dealing with an undisclosed commission scenario.

Finally, undisclosed commissions often come to light if the consumer questions unexplained charges or if a market-wide scandal draws attention to particular industry practices—such as the widespread mis-selling of payment protection insurance. The key takeaway is to remain vigilant, examine your paperwork, and recognise any scenario where you have not been made fully aware of how a broker or intermediary is being compensated. If uncovered, these commissions may give rise to allegations of a breach of fiduciary duty, misrepresentation, or even an unlawful inducement in certain regulated contexts.

Why undisclosed commissions are a problem

Undisclosed commissions strike at the heart of trust and transparency in financial dealings. In many cases, a consumer enters into an agreement under the assumption that the intermediary or broker is working on their behalf, guiding them towards the best or most suitable product. When there is a hidden financial incentive influencing that advice, the consumer’s interests risk becoming secondary to the broker’s personal gain. This potential for conflict of interest, if not properly managed or disclosed, can render the entire agreement tainted.

From a legal standpoint, undisclosed commissions undermine the concept of “informed consent.” The general principle is that a party purchasing a financial product or insurance policy should be made aware of any fees or commissions that affect the true cost of that product. A hidden commission effectively distorts the cost structure, sometimes leading the buyer to pay more for the product than they otherwise would, or to accept terms that might not be in their best interest.

Another significant issue is that undisclosed commissions can adversely impact competition and market fairness. Suppose brokers habitually gravitate toward lenders or insurers that offer the highest secret commissions. In that case, the market can become skewed in favour of providers willing to pay bigger inducements, rather than those genuinely offering the best pricing or terms to consumers. Over time, this behaviour can inflate prices across the industry and undermine the principle of fair competition.

From a consumer protection angle, undisclosed commissions can spark an “unfair relationship,” particularly under the Consumer Credit Act 1974 (for credit arrangements). If a credit broker fails to inform you that they receive a higher commission from one lender than from another, you might unknowingly end up with a more expensive line of credit. This directly conflicts with the principle of transparency that modern consumer law seeks to uphold.

Psychologically, discovering you’ve been subjected to a secret fee can lead to a sense of betrayal and mistrust, not just of that particular broker or lender, but of the financial industry as a whole. Many claimants in undisclosed commission cases report feeling misled and blindsided, which can undermine confidence in future financial transactions. This is why the courts, ombudsman services, and regulators place such emphasis on rooting out these practices and holding those responsible to account.

The ramifications extend beyond the individual. Regulatory bodies view undisclosed commissions as indicative of deeper systemic issues, such as poor compliance culture, inadequate staff training, or a lack of robust oversight. In some well-publicised cases—like certain aspects of the car finance mis-selling controversies—significant volumes of customers were left out of pocket due to widespread undisclosed commission arrangements. Consequently, the problem is not merely a legal technicality; it’s a real-world issue affecting consumer welfare, market integrity, and trust.

If you suspect that an undisclosed commission has shaped the advice you received or inflated the cost of your policy or loan, it’s crucial to act. You might have grounds for a redress claim, potentially entitling you to compensation for any loss suffered. In the broader context, challenging these undisclosed arrangements also contributes to a more transparent system, deterring further malpractice in the industry.

How to spot warning signs in your paperwork

Identifying an undisclosed commission can be challenging because, by definition, it’s something not intended to be obvious. However, there are certain red flags you can look for when reviewing your agreements, statements, and any related documentation. First and foremost, scrutinise the cost breakdown. Does your paperwork mention terms like “administration fee,” “broker arrangement fee,” “referral fee,” or “service charge” without clearly explaining what the fee covers? Ambiguous charges can be a front for an undisclosed commission.

Next, consider whether the lender or intermediary offered an unexpectedly narrow range of products. If a broker only presented you with one or two lender options—or a single insurance provider—this could be innocent, but it might also suggest they are incentivised by a hidden commission structure. If you recall the salesperson emphasising one product over others but providing only vague justifications, this may be worth further investigation.

Below is a sample table of common “hidden fee” descriptions sometimes used in financial documents. Note that not every fee with these labels is undisclosed, but they should raise questions:

Term spotted Possible source of confusion Administration fee May disguise a commission payment Arrangement fee Could be legitimate or cover broker’s commission Service charge Often lacks detail in cost breakdown Handling charge May be conflated with commission

If the cost of your product seems disproportionately high compared to market norms, it’s worth asking how the figures were reached. Sometimes, a borrowed sum or insurance premium is pushed higher to accommodate a commission. You should also be wary if your adviser seems reluctant to provide itemised cost information. A reputable broker or adviser will be transparent about their earnings and will encourage you to review the figures before you commit.

Blockquotes in official documents can also be good indicators. Sometimes, lenders or brokers insert disclaimers in small print that mention “remuneration,” “commission,” or “additional fees.” If such disclaimers are couched in legal or technical language, you might easily overlook them. If you find any clause that mentions a payment made to an intermediary—even if it seems minor—this could be evidence of a commission arrangement.

Also examine communication records, such as emails, text messages, or even phone call recordings, if available. These might contain informal references to how the broker is rewarded. In certain cases, a sales agent might casually mention that they receive a bonus for meeting targets. Although that alone does not prove an undisclosed commission, it can set you on a path to explore the official documentation to see if that incentive is reflected transparently.

Should you detect any of these red flags, gather all relevant documents—loan or policy agreements, statements, marketing materials—and organise them chronologically. You may then consider seeking specialist advice to evaluate whether the fees align with normal industry practice. Keep in mind that even small amounts, repeated over time or inflated through interest, can form the basis of a valid claim if they were undisclosed or insufficiently explained.

The legal framework in the UK

In the United Kingdom, the legality of undisclosed commissions is primarily governed by a combination of statutory regulation and common law principles. Most consumer credit and insurance-related matters fall under the regulatory purview of the Financial Conduct Authority (FCA). The FCA’s rules stipulate that firms must treat customers fairly and provide clear disclosures of any fees, commissions, or incentives. Additionally, the Consumer Credit Act 1974 remains central for credit-related disclosures and redress mechanisms, while the Insurance Distribution Directive influences transparency in the insurance sector.

At common law, undisclosed commissions can breach fiduciary duties. An intermediary or broker, depending on the nature of their relationship with the consumer, might be deemed a fiduciary. Where that duty exists, they must act in the best interests of their client and disclose any conflicts of interest, including financial incentives. Failure to do so can result in the transaction being voidable and an obligation to account for any secret profit; this legal stance has been reinforced by various appellate court decisions in England and Wales.

The doctrine of undue influence and misrepresentation can also come into play. If a consumer was induced to enter into a contract under false pretences or incomplete information, they could potentially rescind the contract or seek damages. In some cases, the undisclosed commission might be so significant that the courts assess whether the consumer would still have agreed to the deal if full disclosure had been made. If the answer is no, or if the broker’s lack of transparency materially altered the consumer’s decision, legal remedies become available.

For claims involving “unfair relationships” under sections 140A to 140C of the Consumer Credit Act 1974, a court has broad powers to evaluate the fairness of the relationship between a creditor and a debtor. The existence of a hefty, undisclosed commission can tilt the balance in favour of the consumer, as courts interpret it as evidence of an unfair or imbalanced transaction. The judge can order a reduction or complete rescission of the debt, among other potential remedies.

Criminal and regulatory consequences are also possible, especially if there is deliberate fraud. Where a broker or arranger systematically conceals high commissions from many consumers, the FCA or Serious Fraud Office could investigate for criminal breaches, though this is less common. More frequently, regulatory action leads to fines, consumer redress schemes, or both. In high-profile instances (as with certain Payment Protection Insurance cases), the FCA has mandated industry-wide redress programmes.

Internationally, the UK is seen as possessing robust consumer protection laws. However, many people remain unaware that undisclosed commissions can constitute grounds for legal challenge. It’s therefore essential for consumers to know they have rights to transparency, fairness, and redress. With an evolving body of case law supporting challenges against concealed remuneration, courts and ombudsman services have increasingly encouraged open, honest dealings between financial intermediaries and their clientele.

Establishing a claim under these legal frameworks often involves proving both the existence of the commission and its nondisclosure. This is where evidence—contractual documentation, emails, phone calls—becomes indispensable. If a consumer can show that a broker or lender failed to adequately reveal the commission, the courts may require the broker or lender to justify their nondisclosure. If they cannot, it bolsters the consumer’s chance of success in seeking a refund, compensation, or contract voidance.

Secret versus half‑secret commissions

When discussing undisclosed commissions, it’s useful to distinguish between secret and half‑secret commissions. A secret commission is where a broker or intermediary receives payment from a third party without the knowledge or consent of the principal (in consumer cases, the person taking out the loan or insurance). This scenario commonly arises when the consumer signs an agreement believing the broker is impartial and does not anticipate that hidden fees are changing hands behind the scenes. The courts have historically taken a firm stance against secret commissions, as they undermine the trust inherent in fiduciary relationships.

A half‑secret commission, on the other hand, is where a consumer is aware that the intermediary is receiving some form of commission, but key details—most importantly, the amount—remain undisclosed. In this situation, the consumer knows a commission exists but is generally unaware of its scale or how it might affect the advice given. Legally, half‑secret commissions still raise serious questions about full disclosure. Even if a consumer signs a contract stating, for instance, “the intermediary may receive remuneration,” the extent of such remuneration can be so large that it influences the intermediary’s impartiality.

From the standpoint of trust law and contract law, both secret and half‑secret commissions can constitute breaches of fiduciary duty if the intermediary’s role is fiduciary in nature (for instance, a finance broker or insurance broker who is supposed to act in the best interests of the client). However, courts sometimes apply different remedies depending on the degree of secrecy involved. If a commission is entirely concealed, the consumer might argue they would never have entered into the agreement had they known. Conversely, in half‑secret commission scenarios, the consumer might argue that although they knew about the commission, the lack of clarity around the amount prevented them from making a fully informed choice.

In practical terms, from a consumer perspective, the distinction between secret and half‑secret might seem minor—both can feel like deception. However, defendants (brokers, lenders, or insurers) often argue that a consumer had sufficient knowledge of a commission—even if only partial—and thus gave implied consent by proceeding. Whether that argument holds hinges on how specific the disclosure was. A vague clause in the small print referencing an unnamed commission is far from an adequate explanation in many judges’ eyes.

Sometimes, an intermediary may provide partial details to protect themselves legally but still withhold crucial facts, such as the true amount of the commission. Regulators and courts likely see such practices as contrived attempts to comply superficially with disclosure rules. If you suspect your commission was at least partially hidden—whether entirely secret or half‑secret—this guide will help you discern if further action is warranted. Regardless of which category your situation falls into, the central point remains that any financial incentive should be disclosed in a transparent and intelligible manner, allowing you to make an informed decision.

Agency, fiduciary duties and the duty to disclose

When someone acts as your agent—be it a broker arranging your mortgage or an intermediary advising you on insurance—they often owe you fiduciary duties under UK agency law. A fiduciary duty is a legal obligation that requires the agent to act solely in the best interests of the principal (you as the consumer), without allowing self-interest to conflict. This principle underpins much of the case law around undisclosed commissions. If an agent receives a payment from a third party that has not been fully disclosed to their principal, it can be seen as a breach of that duty.

In a financial context, the question hinges on whether the relationship between the broker and consumer genuinely has a fiduciary component. For many regulated mortgage, loan, or insurance brokers, the answer is “yes,” particularly if the broker purports to be giving advice and not just presenting options. The law recognises that a consumer relies on the broker’s expertise and integrity, making it critical for the broker to disclose any factors that might influence or bias their recommendations—chief among these being commissions.

Failure to disclose commissions can trigger legal liability in various ways. The consumer could seek restitution of the commission amount, claiming it was a secret profit. Alternatively, they could request that the contract be set aside on grounds of breach of fiduciary duty or, in some cases, misrepresentation. Many of these disputes centre on what type of disclosures were made. For instance, if your mortgage broker included a line in the contract stating they “may receive a commission,” but didn’t specify the amount or explain how it could affect your deal, that might not be considered adequate disclosure.

Moreover, the notion of “informed consent” is paramount. Courts typically hold that for consent to be valid, the consumer must have been fully aware of all material facts. That means not merely a vague statement about a potential commission, but a transparent breakdown of how much commission is involved, how it’s calculated, and how it might influence the broker’s advice.

These fiduciary duties are particularly strong where consumers (who are laypersons in the field) place significant reliance on the agent’s specialised knowledge. According to established case law, if an agent is found to have received secret profits, a court can impose constructive trusts, mandate repayment, and even award damages. It’s worth noting that while regulatory frameworks like the FCA Handbook or the Insurance Distribution Directive impose industry standards, the overlay of fiduciary duties in common law can impose a higher standard of disclosure than what a minimal regulatory rule might require.

If you suspect your agent has hidden commissions, gathering documentary evidence is critical. That may include any brochures or marketing materials implying the agent’s independent status, your contract or credit agreement, and any email correspondence discussing fees or costs. Determining whether your broker’s role was purely administrative (with little or no fiduciary obligation) or advisory (thus invoking a fiduciary duty) will often be a significant factor in how successful a legal challenge might be.

Consumer Credit Act 1974

The Consumer Credit Act 1974 (CCA) is a keystone of UK consumer credit regulation and includes provisions on “unfair relationships” (sections 140A to 140C). These provisions grant courts a wide remit to consider whether the relationship between a borrower and a lender has been rendered unfair due to the conduct of the lender or any associated parties (including brokers). When it comes to undisclosed commissions, these provisions can tip the scales heavily in favour of the consumer.

How does it work? In essence, if you challenge a consumer credit agreement as being part of an “unfair relationship,” the court examines the transaction holistically. It’s not only about whether the commission was undisclosed, but also whether that nondisclosure contributed to an overall unfairness for the borrower. Factors taken into account might include the terms of the agreement, the manner in which it was marketed or sold, the nature of any pressure or inducements, and the total sum (including interest and fees) ultimately paid by the consumer.

One advantage of using the unfair relationship test is that the burden of proof can shift towards the creditor. Once the consumer raises allegations that the relationship is unfair, the lender or broker often needs to demonstrate that it is, in fact, fair. A hidden commission can be a glaring indicator of unfairness, especially if it inflated the overall cost of credit. Even if the consumer agreed to the terms, a court might rule that inadequate disclosure undermined genuine informed consent.

This test offers multiple remedies. The court may order the lender to refund part or all of the extra costs, reduce the amount owed, or even declare the agreement unenforceable in severe cases. The existence of undisclosed commissions frequently makes it difficult for the lender to argue that everything was above board. However, parties will typically debate the extent of the commission’s impact. For example, if the commission was relatively small, the lender might claim it did not materially disadvantage the consumer. On the other hand, if the commission was substantial, the consumer can argue it exerted significant influence on the broker’s guidance.

Unlike some legal avenues, the unfair relationship framework is consumer-centric, aiming to rectify imbalances of power and information. It represents a significant tool because it does not require the consumer to prove the existence of a formal fiduciary relationship. Even if the broker claims merely to be an introducer, if the undisclosed commission contributed to an exploitative or one-sided arrangement, that can suffice to demonstrate unfairness.

Consumers should note that these provisions primarily apply to agreements regulated by the Consumer Credit Act. For certain larger loans or business borrowings, the situation might differ. Nonetheless, even if your specific case sits outside CCA regulation, the essential idea remains: if you were steered into an expensive arrangement through an undisclosed commission, you have grounds to question the fairness of that agreement. Whether through statutory or common law means, courts and ombudsman services stand ready to uphold your consumer rights.

Key court decisions you should know

Over the years, a series of landmark court decisions have shaped how undisclosed commissions are viewed in UK law. Understanding these cases can shed light on the legal principles that might underpin your own claim. While each case is unique, they collectively underscore the courts’ intolerance for hidden fees in consumer finance arrangements.

One pivotal ruling occurred in Hurstanger Ltd v Wilson [2007]. In that case, the Court of Appeal stressed the significance of transparency in broker fees. The broker had not adequately disclosed the size and nature of the commission from a lender, which influenced the advice given to the customer. The court found that such undisclosure could render the contract unenforceable or subject to repayment of commissions. Hurstanger remains widely cited in subsequent claims, reinforcing the principle that consumers must be aware of all material charges.

In McWilliam v Norton Finance (UK) Ltd [2017], a further spotlight was shone on mortgage arrangements involving undisclosed commissions. This case reiterated that even a mention of a commission within the documents might be inadequate if it fails to disclose the full extent, thus preventing genuine informed consent. The judgment emphasised the broker’s duty to place the client’s interests foremost, especially regarding cost and product suitability.

Another key decision, Haines v Carter [2008] (though partly reliant on older legal precedents), tackled the difference between secret and half‑secret commissions. The judgment clarified that even half‑secret commissions could lead to a claim if the disclosure was not robust enough to let a consumer appreciate the magnitude and influence of the payment. This position reinforced the idea that partial disclosure is insufficient and can still lead to the arrangement being set aside.

In more recent times, there have been decisions focusing on car finance and personal contract purchase (PCP) agreements. These rulings have paralleled earlier mortgage and PPI cases, confirming that undisclosed commissions remain a live issue wherever intermediaries operate. As more car finance deals come under scrutiny, courts have consistently highlighted the principle that a borrower should not be unfairly disadvantaged by a broker’s undisclosed remuneration.

Finally, at higher appellate levels, there’s an overarching acceptance that undisclosed commissions, when substantial or otherwise significant, taint the broker’s impartiality. The courts have shown willingness to come down hard on intermediaries who fail to adhere to the highest standards of transparency, especially when dealing with consumers. While specific judgments evolve case by case, the thread running through all these decisions is consistent: consumers have a right to be fully informed, and hidden commissions contravene that right.

As you evaluate your situation, these high-level cases illustrate how courts might approach your claim. They also underscore the importance of documentation, as each judgment often turned on whether the evidence showed genuine, informed disclosure or a murky, insufficient reference to a fee. For claimants, leveraging the precedent set by these rulings can provide a robust framework for challenging unfair, undisclosed commission arrangements.

Common products and sectors affected

Undisclosed commissions can surface in nearly any financial product that involves brokers or intermediaries. However, certain sectors have a higher propensity for such practices based on their history and the sheer volume of transactions. One of the most frequently cited areas is consumer credit, encompassing credit cards, personal loans, secured loans, and motor finance deals. Brokers and dealers in these industries may be tempted to push specific products due to the commission structures offered by lenders.

The insurance sector, particularly where policies are packaged with add-ons, is another hotspot. Consumer lines such as car insurance, home insurance, and life insurance often involve brokers who may receive an extra commission for each policy sold or renewed. If you have purchased an insurance policy through a price comparison website or face-to-face with an adviser, there’s a possibility of additional, undisclosed payments if the broker has relationships with particular underwriters or managing general agents.

Mortgages and secured lending, especially subprime or near-prime products, have also been rife with hidden fees. Prior to increased regulatory scrutiny, some brokers would mark up interest rates to include their undisclosed commission, pushing borrowers into more expensive loans. Although reforms have aimed to clamp down on these practices, there are still ongoing claims dealing with historical misdeeds in this area.

Beyond these mainstream products, undisclosed commissions quietly feature in niche segments. For instance, travel agents might receive undisclosed commissions for selling certain travel insurance or holiday financing options. Similarly, retail store staff could be offered incentives when adding payment protection plans to the products they sell. While these might be smaller transactions, they still involve the same principles of transparency, fairness, and informed consent.

Below is a brief table summarising some of the most commonly affected sectors:

Sector Typical scenario Mortgages and secured loans Broker fees, inflated rates, or undisclosed commissions on completion Motor finance PCP or HP deals with discretionary broker commissions Insurance products Broker receiving override commissions from insurers Consumer goods financing Retail finance with hidden referral fees

It is crucial to note that not every commission is inherently wrongful. In some sectors, commission-based remuneration is standard and lawful, provided it is transparently disclosed. Issues arise when the consumer remains ignorant of this aspect of the transaction. Understanding your rights in each sector is vital, especially if you suspect undisclosed payments may have hiked up your costs or influenced the advice you received.

If you find yourself with a lingering concern specific to one of these product areas, reading through relevant sections of your documentation—such as loan agreements, credit broker forms, or insurance schedules—can help confirm or dispel those suspicions. Look for references to “commissions,” “referral fees,” or “arrangement fees.” If these references are missing entirely but you suspect an intermediary was compensated, you may want to investigate further. In many documented cases, even small commissions can add up, especially if they accrue interest over the life of a loan. Early detection can help you take timely action.

Car finance and discretionary commission arrangements

Car finance, particularly Personal Contract Purchase (PCP) and Hire Purchase (HP), is one of the recurring contexts in which undisclosed commissions have been exposed. Many dealerships earn a portion of the interest rate or monthly repayments as commission. Historically, some dealers would receive a higher commission for arranging finance at higher interest rates, giving them a direct incentive to push more expensive deals on unsuspecting customers. This practice has drawn significant scrutiny from regulators, leading to rule changes aimed at curbing discretionary commission models.

Under a discretionary commission model, the dealership effectively sets or negotiates the interest rate within a band approved by the lender. The difference between a lower permissible rate and the final rate offered to the consumer is partly pocketed by the dealership as commission. The consumer might not see this additional profit in the documentation, or if they do, it’s often buried under non-transparent terms. Consequently, the borrower could end up paying hundreds or thousands of pounds more in interest over the life of the agreement than they would have if the dealership had chosen a lower rate.

This scenario has parallels across many lenders and dealerships. As customers usually focus on the monthly payment figure, they often neglect to question how that figure was arrived at or whether it includes extra commission for the dealer. While many finance agreements do mention that the dealership “may receive a commission,” they rarely specify how much, nor do they explain that the dealership has partial control over your interest rate.

The FCA has intervened in recent years by banning certain types of discretionary commission models (as of 2021) to ensure fairer lending practices. However, if you took out a car finance agreement prior to these changes, there could still be undisclosed commissions in your deal. Even post-ban, some forms of commission might still exist in different guises, though lenders are now required to be more forthcoming about disclosure.

In practical terms, if you suspect your interest rate was hiked to bolster dealership commission, cross-reference the rate offered to you with average market rates for similar products at the time you signed. It’s also worth looking at any dealer quotes, deposit terms, and final payment schedules for red flags, such as unexplained add-ons or inflated monthly payments. If figures remain unclear, you can request a full breakdown or do a subject access request (SAR) to obtain internal dealership-lender communications.

From a legal standpoint, undisclosed commissions in car finance may constitute an unfair relationship under the Consumer Credit Act. Courts and the Financial Ombudsman Service have at times required lenders to reimburse part of the extra interest or revert the loan terms to a fairer rate, thus remedying the consumer’s disadvantage. If the dealership or lender fails to provide clarity or if their records confirm a high commission cut, you may have grounds to pursue redress. Although each situation is unique, awareness of how discretionary commission structures function is your first line of defence against overcharging.

Payment protection insurance and legacy claims

Payment Protection Insurance (PPI) serves as a cautionary tale for how undisclosed commissions can become a massive consumer scandal. PPI was commonly sold alongside loans, mortgages, and credit cards with the stated promise of safeguarding borrowers against loss of income in case of unemployment or illness. However, the commission structures underpinning PPI sales were often hidden from the consumer. Numerous banks and lenders offered brokers or sales staff substantial incentives to sell PPI, sometimes overshadowing whether the policy was genuinely suitable.

The UK’s largest-ever consumer mis-selling scandal revolved squarely around these hidden or undisclosed commissions, high premiums, and the questionable necessity of the policies themselves. Millions of consumers paid for insurance that was either useless to them—due to exclusions like part-time employment or pre-existing conditions—or priced disproportionately high because of the commission loaded into the premium. One of the watershed moments came when the Supreme Court decided in Plevin v Paragon Personal Finance Ltd [2014] that an undisclosed commission of over 50% made the relationship unfair under the Consumer Credit Act.

Even though the official complaint deadline for PPI claims has now passed (August 2019 for most), the ramifications continue. A subset of claims focuses specifically on the “Plevin” aspect, where undisclosed commissions may still entitle consumers to compensation, depending on ongoing or legacy court interpretations. As a result, some lenders have undertaken “post-deadline” procedures to identify and refund consumers impacted by extremely high undisclosed commissions.

For those consumers still looking into PPI or uncertain if they had it, it’s essential to check your loan or credit card statements from the relevant time. While the formal route to a PPI reclaim may be narrower than before, there could still be redress options if you can prove the existence of a high or disproportionately large commission arrangement. Especially if you suspect that the commissions soared beyond the 50% threshold cited in Plevin, you may have a strong case for reimbursement or interest adjustments.

Likewise, certain legal experts argue that PPI claims, albeit more difficult to pursue now, can still be reopened if new evidence emerges about particularly egregious commission schemes. Some claims management companies continue to specialise in PPI and undisclosed commission claims post-deadline. If you choose this path, be cautious: unscrupulous firms may over-promise outcomes or charge excessive fees. Always validate how any claims handler or solicitor structures their fees and ensure they act transparently on your behalf.

All in all, while the PPI landscape has evolved significantly since its heyday, the lessons learned remain highly relevant. The scandal exemplifies how undisclosed commissions can proliferate in products that purport to offer peace of mind but ultimately serve to boost intermediary profits. The broader consumer finance industry has partially reformed in response, but it remains crucial for individuals to question and scrutinise every fee and commission when purchasing insurance add-ons.

Mortgages, secured loans and broker fees

Mortgage and secured loan markets traditionally rely on intermediaries to connect prospective borrowers with the right lender or product. While this part of the financial sector is regulated, undisclosed commissions have surfaced as a concern over the years, particularly when brokers have the discretion to steer borrowers into higher-interest products in exchange for greater remuneration. In some cases, the borrower might also be charged “broker fees” at the outset, only to later discover that the broker received a second, undisclosed payment from the lender.

What makes mortgages especially significant is the sheer cost and long-term nature of these arrangements. If a hidden commission inflates your interest rate by even a small fraction, you may end up paying thousands of pounds extra over the life of the mortgage. Borrowers often operate under the assumption that a broker is searching the market for the best rates. However, if the broker’s choice is heavily influenced by a provider paying a more lucrative commission, that assumption of impartiality is broken.

Furthermore, some subprime or adverse credit lenders have historically been associated with higher broker commissions due to the increased risk they allegedly take on. While that might justify a higher fee in certain cases, it can also be a pretext for inflating broker remuneration. If the broker fails to disclose these payments, the borrower is deprived of the chance to question whether a slightly better deal could exist elsewhere. Seeking clarity on the extent of any fees is paramount, especially if your credit profile led you to subprime products.

In the realm of secured loans—sometimes called second-charge mortgages—the potential for undisclosed commissions is similarly high. Many experts advise comparing main mortgage deals with second-charge options. However, if a broker earns more from promoting secured loans, they might push borrowers in that direction even if remortgaging or another product could be more cost-effective. By the time the borrower realises the discrepancy, they are locked into an agreement with exit penalties or complicated refinancing options.

To guard against such scenarios, UK regulations require that brokers provide a document, typically called a Key Facts Illustration (KFI) or Mortgage Illustration, detailing all fees, charges, and commissions. Whether these requirements are strictly followed or adequately explained remains variable. If your mortgage or secured loan was arranged without a clear breakdown of every intermediary fee, you might question the transaction’s transparency.

Ultimately, the presence of undisclosed commission and broker fees in mortgage or secured loan agreements can render a relationship unfair under both the Consumer Credit Act and broader equitable principles. Courts and ombudsman services often take a dim view of hidden profits, especially when they involve a borrower’s primary residence. For this reason, thorough review of your mortgage documentation and, if needed, professional advice is essential to ascertain whether an undisclosed commission has impacted the cost or structure of your deal.

Insurance and other add‑on products

Insurance products, whether motor, home, life, or add-ons like gadget cover or travel insurance, are frequently sold through intermediaries who receive commissions for every successful sale. If disclosed transparently, these commissions may be perfectly lawful. However, issues arise when the consumer is either unaware of the existence of these commissions or misled about their magnitude. Certain types of add‑on insurance—like loss damage waivers for car rentals or extended warranty policies on home appliances—also frequently involve hidden charges.

In the UK, insurance sales follow stringent regulatory guidelines, primarily set out by the FCA. Intermediaries must provide clear information about costs, coverage, and how they are remunerated. Yet, a recurring issue is that many consumers only see a lump sum figure for their premium, without a breakdown of what part is going to the insurer and what part is paid as commission. Sometimes, the insurer’s commission can amount to a substantial percentage of the policy’s total cost, leaving the consumer vulnerable to paying significantly more for coverage than needed.

The risk of undisclosed commissions in insurance is heightened by the complex nature of policies. The fine print can be laden with legal jargon, which can obscure a direct explanation of fee splits. Furthermore, brokers might claim to be “independent” while actually having close ties to a particular insurer that compensates them generously. As a result, you may mistakenly believe you are getting impartial advice, while in reality the policy choice is influenced by an undisclosed financial incentive.

Below is a short table outlining common areas within insurance and add-on products where undisclosed commissions might lurk:

Insurance / Product Potential undisclosed commission scenario Car insurance Hidden broker fees or aggregator site bonuses Home insurance Broker or estate agent tie-ins with specific insurers Travel insurance Travel agent earning extra for “preferred provider” sales Gadget/lifestyle cover Retail staff incentives to add coverage at point of sale

When you read through your policy documents, watch for generic phrases like “we may receive a fee or commission for arranging this insurance.” This statement, while legal in a very broad sense, may not go far enough in clarifying the scale of the commission. If you suspect you are paying over the odds, it could be beneficial to request clarification in writing or to compare quotes from multiple brokers, specifically asking about their commission structures.

If undisclosed commissions come to light after you have already purchased the policy—perhaps because you found significantly cheaper coverage elsewhere or discovered a certain insurer generally pays out “ introducers” more than the going rate—you might be able to lodge a complaint. Both the Financial Ombudsman Service and the courts can consider claims related to mis-sold or unfair insurance agreements, including those with hidden fees. In many instances, an ombudsman will assess whether you received fair value and adequate disclosure, potentially ordering compensation or a premium refund if they find you were misled.

Who can bring a claim

In principle, any consumer who has been subject to an undisclosed commission in a regulated financial or insurance transaction can bring a claim. This includes individuals who took out loans, mortgages, or insurance policies, as well as small businesses in certain contexts (especially if the finance agreement is still classed as regulated under consumer credit rules). Even if your original contract has ended—such as a fully repaid loan—there can still be grounds for a claim so long as it falls within the relevant limitation period and you have evidence of undisclosed fees.

The right to bring a claim is not limited to the principal signatory. In cases involving joint borrowers, both parties could be eligible to claim if they were both adversely impacted. For instance, if you and your spouse took out a joint mortgage with undisclosed commissions, you may both have standing. Executors of estates can also potentially bring claims on behalf of deceased individuals if they discover that the deceased person paid hidden fees. This can be particularly relevant in historical mis-selling scandals like Payment Protection Insurance, where claims can continue even after the policyholder’s death.

Small businesses and partnerships often assume they lack recourse, but certain protections still apply, particularly if the business borrowing is not above certain financial thresholds. Some brokers might argue that commercial transactions involve “savvy” businesspeople who should be responsible for their own due diligence. However, courts and the Financial Ombudsman Service can take a different view if the business transaction more closely resembled a consumer deal, or if the broker held themselves out as an impartial adviser.

You can typically launch your claim through several avenues:

• Internal complaint procedures: Many firms are required to have a complaint-handling process.

• Financial Ombudsman Service: An informal but binding route for regulated agreements, offering free dispute resolution.

• Court proceedings: More formal, potentially expensive, but sometimes necessary for complex or high-value claims.

Even if you are unsure whether your agreement is regulated, you may still be entitled to bring a claim under common law for breach of fiduciary duty or misrepresentation. This would hinge on proving that the intermediary had a duty of loyalty to you and that the undisclosed commission breached that duty. Often, the facts of the transaction will guide whether statutory or common law remedies apply.

Since undisclosed commissions can affect multiple areas—loan rates, insurance premiums, redemption penalties—any consumer or small business who suspects that costs were artificially inflated or that advice was compromised has the right to explore a claim. The main deciding factor is not just who the formal parties to the agreement were, but whether they have suffered detriment due to the undisclosed or hidden nature of the payments. If in doubt, it’s wise to gather relevant paperwork and consult an expert for an assessment of your options.

Time limits, limitation and deliberate concealment

When contemplating a claim for undisclosed commissions, it is crucial to be aware that time limits apply. Under the Limitation Act 1980 (in England and Wales), claims for breach of contract or tort generally must be brought within six years of the cause of action. However, for many undisclosed commission claims, the deadline can be more nuanced. If you discovered the existence of a secret commission only recently—long after signing your agreement—the law may recognise a later “date of knowledge.” This can extend your limitation period if you can show that the commission was deliberately concealed.

Deliberate concealment is a powerful concept. It essentially says that if the defendant took active steps to hide their wrongdoing, the normal time limit might not start running until the fraud or concealment is discovered (or could reasonably have been discovered). In the context of undisclosed commissions, many lenders or brokers argue they did not deliberately hide anything, citing partial disclosures or ambiguous contract terms as evidence of compliance. However, from the consumer’s perspective, if you never saw any mention of these fees, or they were disguised in a manner that no reasonable person would notice, you may be able to argue deliberate concealment.

It is also worth noting that in mortgage or other long-term agreements, the limitation clock might start anew with each payment you make under the contract, though the legal interpretation can be complex. Similarly, in Scotland, the rules around prescription can differ from those in England and Wales, and Northern Ireland follows a similar limitation framework but with its own nuances. Therefore, establishing the exact cut-off point for your claim can require careful legal analysis.

In some undisclosed commission disputes, a key argument arises over when the consumer “ought reasonably to have discovered” the wrongdoing. If the relevant documents were available to the consumer (e.g., a copy of the agreement referencing some form of fee), a court might find that the clock started at the time of signing—unless the wording was so opaque that an ordinary reader would not have identified it as a commission. Given these complexities, it’s wise to seek professional advice if you are even uncertainly close to the six-year boundary.

A well-documented approach can help demonstrate why you did not previously suspect anything untoward. For instance, you might produce regular statements that never mentioned a broker’s fee or show that you only realised something was amiss upon reading media reports about a commission scandal. Whatever the circumstances, do not assume you are out of time simply because the six-year mark has passed. Deliberate concealment is a recognised ground for extending limitation, though each case turns on its specific facts.

Ultimately, prompt action is always advisable. Even if you can extend the time limit through arguments of concealment, initiating your claim sooner gives you a better chance of gathering reliable evidence, obtaining witness statements, and establishing a clear narrative about how and when you discovered the commission. Delay can weaken the practical aspects of your case, even if you remain technically within limitation.

Evidence and documents you will need

Building a robust claim for undisclosed commissions often hinges on obtaining and presenting solid evidence. The most obvious starting point is the original contract or agreement you signed—whether this is a finance agreement, insurance policy, or broker arrangement. If you have multiple versions or updated terms, keep them all. In situations where documents were provided electronically, search your emails or any online portals for digital copies.

Statements and invoices also play a critical role. These can help illustrate how much you paid and when you paid it. For instance, if you notice a suspiciously labelled “admin fee” or “arrangement cost,” keep a close eye on whether it aligns with standard market rates. Bank statements can corroborate whether you were charged extra amounts. Comparisons of your agreement terms with typical rates from other providers at the same period can also serve as indirect evidence of potential overcharging.

Any communications—emails, letters, recorded phone calls—where a broker or adviser discussed costs or commissions could be invaluable. Even casual references to receiving a “bonus” or “incentive” from a lender can help establish that a commission arrangement existed. If you have text messages discussing your deal’s structure or if the intermediary made statements about being “cheapest” or “best,” media evidence might illustrate how the commission was hidden. For instance, if they dismissed queries about fees or changed the subject when you asked about cost breakdowns, that could signal concealment.

A subject access request (SAR) under the UK General Data Protection Regulation (GDPR) is another powerful tool for gathering evidence. By filing an SAR with the lender or broker, you can request all data they hold about you. This might include internal email threads, phone call transcripts, or other internal documents revealing the arrangement between the intermediary and the provider. If they mention undisclosed fees or show a commission split, you may have the “smoking gun” you need for your claim.

You might also consider obtaining expert evidence. An independent financial adviser or forensic accountant can scrutinise your agreement and highlight irregularities, especially if your case involves complex calculations or multiple layers of fees. While such expertise can be costly, it might prove invaluable in high-value claims or where the commission structure is particularly convoluted.

Lastly, remember that consistency and organisation can bolster your credibility. Create a dedicated file—even a digital one—where you store all relevant documents. Label them clearly, note the dates each document was received or created, and write short summaries of phone calls or face-to-face meetings immediately after they happen. This methodical approach will assist you or your legal representative in constructing a clear, persuasive narrative about how and why undisclosed commissions inflated your costs or influenced your purchasing decisions.

Getting your data using a subject access request

A subject access request (SAR) is a potent tool for anyone suspecting they have been misled or overcharged through undisclosed commissions. Under UK data protection laws, you have the right to access personal data held about you by companies, including lenders, insurers, and brokers. Crucially, “personal data” can extend to internal emails, call notes, or system records where your name or identifiable details appear—even if it also contains references to their commission arrangements.

To initiate a SAR, you typically send a written request (many companies accept email requests). Your request should state your name, the accounts or policies in question, and your desire to receive all relevant data held by the organisation. By law, they are generally required to respond within one month, though they can ask for an extension in complex cases. Many institutions provide SAR forms on their websites, but using such forms is not mandatory. You can send your request in a simple letter or email, as long as it clearly indicates you are requesting access under data protection law.

When drafting your SAR, try to be specific about the data you are after. For instance, you might say: “Please provide me with all records relating to my car finance agreement, including internal memos, email correspondence, call recordings, transcripts, commissions, or fees charged, and any other relevant documents.” While you do not have to justify why you want the information, stating the nature of your concern can help the organisation locate relevant data more efficiently.

Once you receive the data, sift through it carefully. Look out for any references to “commission,” “fees,” or “bonus,” as well as internal correspondence discussing your account. You might find clues such as back-and-forth emails between the broker and lender haggling over rates or referencing “margin” or “mark-up.” In some cases, redacted sections may pique your interest; if the company has withheld certain data claiming confidentiality or privilege, you have the right to question whether that redaction is valid under data protection law or if they are improperly concealing incriminating evidence.

If the institution fails to respond within the statutory time frame or provides incomplete data, you can escalate your complaint to the Information Commissioner’s Office (ICO). Such non-compliance can strengthen your argument that the organisation is deliberately hiding something, potentially reinforcing a “deliberate concealment” claim if you later need to tackle limitation issues. Remember, the aim of a SAR is to gather enough information to determine if an undisclosed commission existed or whether any other mis-selling practice occurred.

Finally, keep everything you receive from the SAR securely. If you later bring a complaint to the Financial Ombudsman Service or a court action, these documents could be pivotal evidence. Make sure to index them so that you or a legal adviser can quickly identify relevant details, reference them in arguments, and demonstrate to the decision-maker exactly how the undisclosed commission came into play.

How to check if you were affected

Determining whether you have been impacted by undisclosed commissions typically begins with a careful review of your financial agreements and payment history. Start by locating the credit or insurance contract, then cross-reference the total amount you are paying or have paid with commonly available market rates. If your deal is noticeably more expensive than what a typical consumer with a similar profile would pay, it’s worth digging deeper to see if undisclosed commissions might be part of the reason.

A useful step is to create a summary table of your key details:

1. Product details: Mortgage, car finance, insurance policy, etc.

2. Provider: Name of the lender or insurer.

3. Broker/intermediary: The person or firm you dealt with.

4. Fees stated: Any arrangement, admin, or broker fees specified in the documents.

5. Interest rate or premium amount: Compare with average market data for the same period.

If, upon doing this comparison, you notice a glaring disparity that lacks a clear explanation, try contacting the intermediary for clarification on how they were compensated. Document any phone calls or email exchanges, and note particularly if they give vague, evasive, or contradictory responses. If they mention they “can’t disclose that information due to commercial sensitivity,” it might be a sign that something is amiss.

Additionally, gather any marketing materials or disclaimers you received at the time of signing. Sometimes, undisclosed commissions hide in plain sight—small print might loosely mention “the broker may receive financial incentives,” without specifying the nature or size of such incentives. Despite being overshadowed by complex contract language, these statements can be crucial to establishing partial or half‑secret disclosure.

You might also evaluate your interactions. Did the broker pressure you into a deal quickly? Were there phrases like, “This offer is only valid today,” or “You need to sign now to lock in your rate”? While high-pressure tactics alone don’t prove undisclosed commissions, they can be an indicator of an intermediary’s financial motive to close the deal fast. If you suspect such incentives were driving the advice, it’s another clue pointing toward potential commission issues.

After collecting these self-check indicators, decide if you want professional advice. Some consumers choose to consult free legal helplines or speak to a formal financial adviser to interpret their figures. Or, you can approach the Financial Ombudsman Service if you believe a regulated provider’s disclosure fell short. If the product in question was older and you can’t find relevant paperwork, a subject access request (SAR) could fill in the gaps. Ultimately, you do not need to have absolute proof of an undisclosed commission to raise suspicion with a firm or an ombudsman, but being organised and confident in your suspicions certainly helps.

Making a complaint to the firm

Once you suspect undisclosed commissions have influenced your financial or insurance agreement, the logical first step is often to complain directly to the firm involved—be it the lender, broker, or insurance intermediary. Under the FCA’s complaint-handling rules, regulated firms must treat complaints fairly, investigate them diligently, and provide a final response within stipulated time frames (usually eight weeks). In this stage, clarity and organisation can greatly improve your chances of success.

Begin by drafting a concise complaint letter or email. Briefly outline the background: the product you purchased, the date, the broker’s name, and any fees or interest rates you specifically question. Then state why you suspect an undisclosed commission. Mention any relevant documents or communications that led to your belief, such as a suspicious fee line in your agreement or internal references uncovered via a subject access request. Request that the firm investigates whether any commission was paid to an intermediary that was not adequately disclosed.

It helps to articulate the remedy you seek. For undisclosed commission claims, typical remedies might include a refund of the commission portion, interest adjustments, or even full rescission of the agreement in serious cases. If you have evidence—like email trails or overshadowed disclaimers—cite them, but keep your tone professional. Overly aggressive language could diminish the constructive nature of your complaint and reduce the likelihood of a favourable outcome in the first instance.

Once your complaint is lodged, the firm may request additional details or offer an initial settlement. If the firm’s final response rejects your allegations or offers a resolution you deem insufficient, you can escalate the matter to the Financial Ombudsman Service (FOS). Alternatively, if the product is not covered under FOS jurisdiction or you prefer a more formal route, you could proceed to court. Many claims, however, find resolution at this stage if the firm recognises the risk of a protracted dispute.

Document every step. Keep copies of your complaint letters, the firm’s acknowledgements, and any final letters of response. Some firms might try to discourage you, saying that commissions are “private” or that “disclosure was sufficient,” but do not be deterred if you strongly feel they lacked genuine transparency. The complaint stage might also unearth new documents or clarifications from the firm—sometimes they reveal partial details that further confirm your suspicions.

If your complaint succeeds, the firm might offer restitution or a recalculation of your payments. Examine any settlement carefully. Does it address the full period during which the undisclosed commission impacted you? Does it include a fair rate of compensatory interest? If in doubt, do not rush to accept a partial or ambiguous offer. You always retain the right to escalate. Nonetheless, if the offer is comprehensive, you may find this an efficient resolution without needing a lengthy court battle.

Taking your case to the Financial Ombudsman Service

The Financial Ombudsman Service (FOS) is a free and relatively informal dispute resolution mechanism for consumers who find themselves in a stalemate with a regulated financial firm. It is often quicker and less adversarial than court proceedings. If you’ve lodged a complaint with the firm and either received a final response that you consider unsatisfactory or hit the eight-week deadline without a final response, you can escalate the matter to the ombudsman.

When you submit your complaint to the FOS, you’ll provide the same evidence you gathered previously: copies of relevant agreements, statements, correspondence, and your complaint letter. The ombudsman will then conduct an independent review, possibly asking the firm for further information or clarifications. You can continue to submit any newly discovered documents as the investigation proceeds.

One advantage of taking the FOS route is that it applies a “fair and reasonable” test rather than strictly adhering to legal technicalities. This can work in your favour if the undisclosed commissions are evident, but the legal points around fiduciary duty or contractual interpretation are complex. That said, the ombudsman’s decisions are binding on the firm if you accept them, so you need to be comfortable with the potential outcome. It’s crucial to note that you always have the right to reject the ombudsman’s final decision and proceed to court, but once you accept the decision, your case is generally concluded.

The ombudsman has broad powers to order redress, such as:

• Refunding part or all of the commission or fees

• Restructuring the agreement to remove unfair terms

• Awarding additional compensation for distress or inconvenience

While FOS cases often resolve more swiftly than court litigation, it’s not always immediate. Depending on the volume of complaints and case complexity, it could take several months (sometimes a year or more). You can monitor your complaint status through their online portal, and an adjudicator will typically offer you and the firm a preliminary view before the matter is escalated to an ombudsman for a final decision.

If the ombudsman rules in your favour, the firm must comply, or risk regulatory penalties. In many cases, simply the act of escalating to the ombudsman exerts enough pressure on the firm to negotiate a settlement. If your complaint spans multiple issues—such as undisclosed commissions and mis-sold add-ons—the ombudsman will evaluate them in entirety to see if collectively they made the relationship unfair or if the costs were inflated.

Considering the ombudsman route is advisable for most individuals, particularly if you do not wish to engage in the formalities of court. However, if your claim is extremely high-value or involves complex legal arguments, you may weigh the potential advantage of court procedures, where you can present extensive legal submissions and potentially receive a higher damages award. Each route has pros and cons, but for many consumers, the FOS represents a user-friendly alternative for redress.

Starting a court claim in England and Wales

If your attempts at an internal complaint or the ombudsman route do not yield satisfactory outcomes—or if you prefer formal legal action from the outset—you can file a claim in the county court (or High Court depending on the claim value) in England and Wales. This route can be more rigorous and potentially more expensive, but it also allows for a detailed examination of legal issues, cross-examination of witnesses, and the application of a wide range of judicial remedies.

Before commencing, you must issue a Letter Before Action (LBA), setting out the basis of your claim, the facts, and the remedy you seek. This letter should comply with the relevant pre-action protocol, which aims to encourage early settlement. The defendant (broker or lender) has a set time frame to respond, usually 14 days for routine matters, though more complex disputes can allow 30 days or longer. If you fail to observe these protocols, a court may penalise you in costs.

When drafting your claim, specify the alleged wrongdoing clearly: breach of fiduciary duty, misrepresentation, or an unfair relationship under the Consumer Credit Act, for example. Include particulars such as:

• Dates and details of the agreement

• The undisclosed commission (estimated or proven)

• Why the non-disclosure made the arrangement unfair

• The damages or redress you seek

You’ll need to pay a court fee, which scales with the claim value. If your claim is relatively small (under £10,000), it may fall under the small claims track, where costs are limited. For higher-value claims, it could be allocated to the fast track (£10,000–£25,000) or multi-track (above £25,000). The allocation affects how the case is managed, including the complexity of disclosure, the length of the trial, and potential liabilities for legal costs.

During the disclosure phase, both parties must reveal all relevant documents, which could unearth pivotal evidence of how commissions were arranged. Witness statements may also be exchanged, possibly including evidence from the consumer, the broker, and any lending staff involved. Expert evidence, such as a forensic accountant’s report, might be admitted if calculations regarding the commission’s impact are contested.

If you prevail, the court may order refunds, contract rescission, or damages to compensate for higher costs and associated losses. In many undisclosed commission cases, a successful claim includes repayment of the commission plus interest at a rate set by the court, often 8% per annum from the date of each payment. Conversely, if you lose, you could be liable for the defendant’s legal costs—especially if allocated to the fast or multi-track. Therefore, having a strong evidential base and legal strategy is paramount.

While litigation offers thorough adjudication, it’s neither quick nor cheap. Mediation or negotiation at any stage can still yield an out-of-court settlement. In practice, many defendants might consider settling if you have a compelling claim to avoid trial risks and the associated negative publicity. Ultimately, whether to opt for litigation or alternative routes like the ombudsman depends on the complexity, potential compensation, and how comfortable you are navigating legal processes.

Routes in Scotland and Northern Ireland

Scotland and Northern Ireland each maintain distinct legal systems and procedures, even though they share many consumer protection principles with England and Wales. If you reside in Scotland or Northern Ireland—or if your financial agreement was executed there—it’s essential to note a few key differences. For instance, limitations (or prescription, as it’s called in Scotland) can vary, as can court procedures and ombudsman jurisdictions.

In Scotland, claims under £5,000 typically proceed through the Simple Procedure in the sheriff courts. Above £5,000 and up to £100,000 falls under different sheriff court procedures, and sums exceeding £100,000 may be heard in the Court of Session in Edinburgh. Scotland’s legal grounds for challenging undisclosed commissions often mirror those in England and Wales, but the specific procedure and time limits may differ. The Scottish approach to prescription can be stringent, so establishing when you first became aware of the commission is paramount.

Northern Ireland, similarly, follows a separate court system with the Northern Ireland Crown Court, County Court, and High Court. Although the Consumer Credit Act, the Financial Conduct Authority’s regulations, and the Financial Ombudsman Service generally apply UK-wide, certain local rules may influence how your claim is shaped. If your dispute escalates to court, you’ll likely need a solicitor experienced in Northern Ireland’s procedural norms.

Applicable standards for fairness—like fiduciary duties and the notion of an “unfair relationship”—are broadly consistent across the UK, given that the Consumer Credit Act and major consumer directives apply in all four nations. The Financial Ombudsman Service also covers consumer disputes across the entire UK for regulated credit and insurance agreements. However, if your case rests primarily on common law (like breach of fiduciary duty) or if the agreement is unregulated, the local rules become more significant.

For many claimants, a logical first step is to ascertain eligibility under national-level consumer protection frameworks. Then, consider local advice to ensure compliance with procedural nuances. For instance, the rules around lodging a complaint or serving legal documents can deviate slightly. Representation by a solicitor or advocate versed in the local civil procedure is often beneficial, especially for higher-value or more complex claims.

In practice, many cross-border lenders operate nationwide, so they are familiar with multiple jurisdictions. If you suspect undisclosed commissions but are unsure where to bring your claim—especially if you live in one part of the UK but signed the agreement in another—initially consult with a legal professional. They can help clarify which court or ombudsman route is most appropriate. Regardless of location, the core principle remains: if you suspect you were subjected to an undisclosed or insufficiently disclosed commission, you have options to seek redress.

Remedies, redress and interest

If your claim for undisclosed commissions succeeds—through negotiation, ombudsman adjudication, or a court order—you may be entitled to several forms of redress. The most common remedy is reimbursement or restitution of the commission amount itself, reflecting the principle that one should not profit from a secret fee. In the context of a loan, the court or ombudsman might re-calculate your interest rate to strip out the hidden compensation element, effectively lowering your outstanding balance or awarding you a refund of excess interest paid.

Another possible outcome is the setting aside or rescission of the entire agreement. This is more likely in severe cases where the undisclosed commission formed a significant part of the transaction or where the broker’s conduct was particularly egregious. Rescinding a credit agreement cancels it retrospectively, although practically, you might still have to pay back the principal amount borrowed if you derived benefit from it. Courts and ombudsman services can also vary or rewrite contractual terms to make them fairer, rather than cancelling the agreement outright.

In addition to refunding the commission, interest might be awarded on any sum repaid to you, typically at a rate set by the court or as recommended by the ombudsman. This can range from 8% simple interest in court judgments (considered a standard in many consumer claims) to lower or higher amounts, depending on the specifics. If you’ve been battling undisclosed commissions for several years, the interest calculation can become substantial.

Some adjudications also include a compensatory element for distress, inconvenience, or financial hardship caused. For instance, if undisclosed commissions led to higher monthly repayments that forced you to cut back on essential spending or placed you under stress, you might be eligible for a modest award reflecting that emotional or practical toll. The Financial Ombudsman Service is particularly receptive to claims of inconvenience, though the sums for non-financial loss are often modest compared to principal refunds and interest.

It’s important to appreciate that every case is fact-specific. A small undisclosed commission might result in a proportionate refund, while a large or deliberate concealment could trigger more far-reaching remedies. If your loan is ongoing, the remedy might involve altering future repayment terms rather than a one-off payout. In that sense, each outcome is tailored to address the harm you suffered. In any settlement or final decision letter, scrutinise the details to ensure they properly address every element of your overpayment or loss.

Finally, if your case goes to court, costs can be awarded to or against you. Success might mean the defendant pays your reasonable legal costs. Conversely, losing could leave you liable for theirs. Even in the small claims track (for claims under £10,000 in England and Wales), you risk certain fixed costs or hearing fees. Factoring in potential costs exposure is essential before deciding to litigate rather than using cheaper or free redress avenues like the ombudsman. In all scenarios, the objective is a fair resolution that corrects the impact of hidden or insufficiently disclosed fees.

How refunds interact with outstanding balances and set‑off

When you win a refund or redress for undisclosed commissions but still have an outstanding balance on your loan or finance agreement, the concept of “set‑off” often comes into play. Set‑off allows the lender or credit provider to reduce the amount of money they owe you by the amount you still owe on the loan. Essentially, instead of paying you a lump sum, they might subtract it from your remaining debt, leading to a lower balance or fewer monthly payments.

For many consumers, this outcome is beneficial, as it lowers ongoing financial obligations. However, if you would prefer a direct payout—perhaps because you disagree with the outstanding balance or you have other pressing financial needs—discussions about set‑off can become more nuanced. Often, the lender or broker will be within their rights to apply set‑off if the loan agreement or general principles of contract law permit it, unless a court or ombudsman specifically directs otherwise.

Another angle is the calculation of interest. If your undisclosed commission refund is being set off against your balance, the final sum of your outstanding balance might also be adjusted for interest already charged on that portion of the loan. This could effectively recast the entire repayment schedule. Suppose, for instance, that your monthly repayments were inflated to cover the broker’s commission. Getting redress might lower your future monthly outgoings, or in some cases, shorten the term of the agreement if you maintain the same monthly payment amount.

It is wise to carefully review all statements and recalculations the firm provides if they apply set‑off. Make sure they accurately compute the difference between legitimate charges and the revoked or refunded amounts. Discrepancies can occur—especially if the original loan went through multiple variations or if the agreement involves multiple products (e.g., a consolidated loan that included insurance premiums).

If you believe the firm is incorrectly applying set‑off, you can challenge their interpretation. For example, if the undisclosed commission made the entire contract void or voidable, you might argue that you owe nothing further, and thus set‑off should not apply at all. In practice, ombudsman decisions and court rulings will indicate whether the contract remains in force or is rescinded, guiding how any redress is to be handled.

A final consideration is how set‑off interacts with your credit file. If your outstanding balance is reduced, that might positively affect your debt-to-credit ratio. However, if your relationship with the lender has soured, there is a risk of other negative credit markers if payments were missed along the way. Monitoring your credit report post-settlement or post-refund is good practice to ensure your finances accurately reflect the updated status of the loan and any redress you receive.

Impact on your credit file

Dealing with undisclosed commissions can have a knock-on effect on your credit file, particularly if the dispute results in changes to your loan terms or if the complaint process disrupts your usual payment schedule. First and foremost, if a refund leads to a reduction in your outstanding balance, it might improve your debt-to-credit ratio, thereby boosting your credit score in the medium to long term. On the other hand, if you paused or withheld payments pending resolution of a dispute, negative markers could appear on your file.

Credit reference agencies (CRAs) in the UK—such as Experian, Equifax, and TransUnion—collect data about your borrowing behaviour from lenders. If your undisclosed commission claim leads the lender to alter your account, they should update your record accordingly. For instance, if the court or ombudsman rules that part of the debt was unfair and writes it off, the lender may need to register an amendment with the CRA, reflecting a lower balance or possibly removing default markers related to the unfair portion.

One complicating factor arises if the firm disputes your claim, and you choose to withhold or reduce payments while it’s being investigated. The lender might report missed payments or arrears, damaging your credit score. In some cases, successful claims can undo these negative marks, but you must be proactive in ensuring the lender updates your file once the dispute resolves. If they fail to do so, you can raise a dispute with the credit reference agencies themselves, providing evidence from the ombudsman or court outcome.

Additionally, if your entire agreement is rescinded due to the undisclosed commission, the question arises as to how the credit file should reflect that event. Some lenders might report it as a settled account, while others might indicate that the account was withdrawn. In either case, it’s essential to ensure no negative connotations remain, given that a rescission typically suggests the agreement should never have existed in its original form.

A final point: while fair resolution of your undisclosed commission claim should lead to eventual rectifications on your credit file, it may not be immediate. These processes can take weeks or months, and you might need to monitor your reports actively to confirm that changes have been accurately implemented. Regular checks—like obtaining free statutory reports from each CRA—are advisable. If you spot discrepancies, you have the right to add a notice of correction or dispute the data to ensure it aligns with your actual financial position.

Tax treatment of compensation

If you succeed in your undisclosed commissions claim, you may receive compensation or a refund. How this compensation is taxed depends on the nature of the settlement. Generally, a reimbursement of amounts you were not lawfully required to pay in the first place (e.g., a hidden commission or inflated interest) is not treated as taxable income. Rather, it is simply returning money that was wrongly taken from you. However, complications can arise if interest has been added to your refund.

Interest awarded by the lender, a court, or the Financial Ombudsman Service is often considered as compensation for the time you were without the money. In many cases, this “compensatory interest” is subject to income tax. The standard scenario is an 8% simple interest rate on top of the refunded amount, typically reported by the paying firm to HM Revenue & Customs (HMRC). Unless exempt or covered under a personal savings allowance, you may need to declare this interest on your self-assessment tax return. However, the rules can vary slightly depending on individual circumstances.

If your claim is large or involves business transactions, other tax implications might arise. For example, if you claimed the original payments as a business expense in earlier tax returns, you might now need to adjust those returns or reallocate them. Talking to a qualified tax adviser or accountant can help you navigate these complexities.

In some instances, particularly large settlements might attract different tax considerations, such as capital gains tax if the nature of the award changes the classification of the compensation. This is less common, though, as undisclosed commission claims typically revolve around consumer credit or insurance, where the aim is to put you back in the position you would have been in had the commission been disclosed.

For the majority of claimants, the main point is that the principal sum—your own money returned to you—usually remains outside the scope of taxation, while any additional interest might be partially or fully taxable. Confirm with the paying entity whether they have deducted basic rate tax at source on the interest portion. If they have, you might owe less to HMRC, but you could still need to declare it in your tax return. Conversely, if no tax was deducted, you should work out if you have a liability to pay. When in doubt, consult a professional or HMRC’s helpline to clarify your obligations.

Joint borrowers, guarantors and estates

Financial agreements often involve more than one party—this might be a joint mortgage with a partner, a guarantor loan, or even a policy where the insured has passed away and an executor is handling their estate. If undisclosed commissions are discovered, the question becomes: who actually holds the right to bring the claim and receive compensation?

In a joint borrower scenario—such as spouses or business partners—both parties typically hold an equal claim if the undisclosed commission inflated the cost of the agreement. Any redress might be split, although it can also be credited to the account if the loan is ongoing, thus reducing the balance owed by both borrowers. If only one borrower is spearheading the complaint, they should keep the other(s) informed, as decisions on how to apply any refund (including set‑off) affect all parties.

Guarantor loans present a slightly different dynamic. The guarantor commits to stepping in if the primary borrower defaults, yet they are not always the direct recipient of the funds. If an undisclosed commission was part of the deal, the guarantor might argue that they should not be liable for a debt inflated by hidden fees. However, the interplay can become complex if the borrower also contributed to the arrangement. In many instances, the guarantor and borrower jointly bring the claim, asserting the overall unfairness.

Estates add yet another layer. If the individual who was party to the loan or insurance agreement has died, an executor or administrator can step into their shoes to claim undisclosed commissions. This is particularly relevant in historical mis-selling issues like PPI or older mortgage agreements. The general logic is that the claim forms part of the deceased’s assets, and any compensation should be payable to the estate. The executor needs to provide relevant documentation—death certificate, grant of probate—and the usual time limits may apply.

It’s also worth noting that if the undisclosed commission is uncovered post-death, the limitation period might be influenced by the date the executor discovered—or could reasonably have discovered—the wrongdoing. This can intersect with “deliberate concealment” arguments, extending the timeframe in which the estate can claim. As with other cases, gather original documents, check for suspicious fees or references, and maintain open communication with co-borrowers or other stakeholders.

In summary, multi-party arrangements complicate the distribution of any potential redress, but they do not eliminate the core principle: if undisclosed commissions made the relationship unfair for the borrower, each party affected can have a valid claim. Coordination among all parties is vital to ensure that any remedy—be it a refund, set‑off, or contract adjustment—reflects everyone’s interests fairly.

If the firm is insolvent or has closed

Claiming undisclosed commissions against an entity that has ceased trading or become insolvent poses unique challenges. If the broker or lending firm has closed, you may need to ascertain who assumed their liabilities—perhaps a successor company, administrator, or liquidator. In situations where the firm is under administration or in insolvency proceedings, claims often form part of the process in which creditors line up for payouts. Unfortunately, the odds of full recovery can diminish if the pot of available assets is limited.

When a regulated firm collapses (for instance, certain lenders or insurance intermediaries), the Financial Services Compensation Scheme (FSCS) may step in. The FSCS can offer compensation if you have a valid claim and the firm cannot meet its obligations. However, FSCS coverage has limits. For consumer credit, the coverage might be narrower than for banking or insurance failures. The FSCS typically covers up to a certain cap, and only if your agreement meets specific conditions. Checking the FSCS website or contacting them directly can clarify your eligibility.

Even if your claim is legitimate, you may need to register as a creditor. The process usually involves sending proof of your debt or claim to the appointed insolvency practitioner. The practitioner then categorises claims and, if any funds are available, distributes them according to a statutory hierarchy. Secured creditors typically get priority, leaving unsecured claimants (which often includes consumers with mis-selling claims) to compete for what remains.

A potential angle is to identify if any personal indemnities or guarantees were provided by directors or if the firm operated insurance for professional indemnity or wrongdoing. If a professional indemnity insurer is still solvent, you may be able to claim directly from that insurer, although the specifics can be complex. Alternatively, if the original loan or policy was transferred to another provider, that successor might bear responsibility under certain terms of business transfer agreements.

While the situation can look daunting, it’s still worth lodging your claim. In some high-profile collapses, administrators set aside funds for mis-selling claims, prioritising them on moral or regulatory grounds. Although you might not receive the entire sum you are owed, partial compensation is better than nothing. Keep in mind that if the firm is dissolved entirely and no successor or insurer exists, your practical chances of recovery may be zero. However, verifying that thoroughly can spare you doubt and confirm whether you should pursue other avenues of resolution.

Choosing between the ombudsman and the courts

Deciding whether to take your undisclosed commission dispute to the Financial Ombudsman Service (FOS) or pursue court litigation involves weighing several factors. The FOS route is free, typically faster, and focuses on what is “fair and reasonable.” That can benefit you if your undisclosed commission claim is strong in principle but complicated in legal detail. The presiding ombudsman can craft flexible remedies, such as awarding partial refunds, adjusting interest rates, or ordering compensation for distress.

On the other hand, the courts can deliver more definitive legal precedents, which could be advantageous if your claim hinges on intricate legal arguments—such as the precise nature of fiduciary duties or more technical aspects of the Consumer Credit Act. A court ruling is also publicly noted, sometimes pressuring the defendant to settle pre-trial. However, litigation is typically more expensive and time-consuming, and if you lose, you risk bearing the defendant’s legal costs (especially in the fast and multi-tracks).

Financial limits might also influence your decision. While the FOS can award substantial compensation, there is a maximum limit to what they can demand a firm to pay. However, their official limit has steadily increased over time, and they can recommend firms pay amounts above that limit if they believe it’s fair. In contrast, courts can theoretically award unlimited damages, subject to proving the claim. For extremely high-value cases—say, a large commercial mortgage or a portfolio of policies—court might be the only route to achieve full redress.

Another consideration is the potential for appeals. FOS decisions accepted by you as the complainant become final—neither party can appeal. In court, if you lose, you might appeal to a higher court, but the extra cost and time can be substantial. Some claimants appreciate the finality of an ombudsman decision, while others prefer the layered approach of court appeals if they expect to set a precedent or have a novel argument.

Ultimately, choose the forum that aligns with the complexity, value, and personal preferences of your situation. Some consumers start with the ombudsman for a simpler, low-risk approach. If that fails to deliver a satisfactory outcome, they still retain the option to go to court, provided they have not accepted the ombudsman’s final decision. If you suspect your case is straightforward (the commission is clearly undisclosed) but the sums involved are large, weigh the cost implications carefully. Seek legal advice if you remain uncertain, as having the wrong forum can prolong your dispute and potentially jeopardise your claim’s success.

Funding options, costs and risks

Pursuing a claim for undisclosed commissions can involve various expenses. If you proceed through the Financial Ombudsman Service, the process is cost-free for consumers, which significantly limits your financial risk. However, the ombudsman might not be the final word if you’re aiming for a high-value settlement or testing complex legal grounds. In that scenario, you may consider litigation, and that inevitably carries costs and risks.

Hiring a solicitor is one of the most significant potential costs. Some law firms offer “no win, no fee” arrangements (also known as conditional fee agreements). Under this arrangement, you typically pay nothing if you lose, but a success fee might be payable if you win. That success fee is often a percentage of the damages recovered. Another option is After the Event (ATE) insurance, which can cover your opponent’s costs if you lose. Premiums for ATE insurance can be steep, especially if your claim is high-value or perceived as risky. Sometimes, a portion of these premiums is only payable upon success.

A third funding avenue is to use the services of a claims management company (CMC). They often handle undisclosed commission claims on a contingency basis, charging a percentage of any successful redress. While this can be an accessible route, caution is advised: some CMCs charge disproportionate fees or fail to provide a high-quality service. Always check the terms carefully before signing an agreement with a CMC.

Some consumers choose to self-fund, especially if the claim is relatively straightforward and the legal costs are manageable. This approach can save you from sharing a chunk of your compensation with a solicitor or CMC, but it requires a robust grasp of procedural rules and confidence in your ability to articulate the case. You will also bear the risk of adverse costs if you lose in court. For smaller claims—especially those under the small claims track threshold—adverse costs are less of an issue, but you still might incur court fees.

Finally, if you have legal expenses cover as part of your home insurance or another policy, check whether it covers disputes related to undisclosed commissions. Some insurance add-ons do include coverage for consumer contract disputes, which might mean you can have legal support at minimal extra cost. However, insurers often require you to demonstrate a reasonable chance of success before agreeing to fund a claim.

In summary, your choice of funding and representation should align with both the complexity and the potential value of your claim. Understanding the fine print of any funding agreement—whether it’s a conditional fee arrangement, ATE insurance, or a CMC contract—is crucial so you know exactly how much of your award might be deducted if you succeed. Even with the best funding method, litigation is never risk-free. Balancing potential outcomes with costs and the merits of your case is an essential step in deciding whether and how to proceed.

Using claims management companies safely

Claims Management Companies (CMCs) rose to prominence during the Payment Protection Insurance scandal, helping consumers file large volumes of claims. While many CMCs offer legitimate services, the sector has also seen instances of aggressive telemarketing, misleading advertising, and exorbitant fees. If you’re considering using a CMC to handle your undisclosed commission claim, approach the process with caution and awareness of your rights.

First, check that the CMC is authorised. Following regulatory changes, reputable CMCs should be authorised by the Financial Conduct Authority (FCA) if they deal in financial claims. An authorised company must adhere to certain standards: clear communication, fair contracts, and compliance with data protection rules. If the CMC cannot prove it is authorised, that’s a red flag. You can verify their authorisation on the FCA’s online register.

Next, scrutinise the fee structure. Some CMCs charge a flat percentage (often 20–30%) of any compensation recovered, while others combine a percentage fee with an administration charge. Ensure you understand how fees are calculated: is it based on the total redress plus interest? Are there any charges if the claim fails? A well-drafted agreement should also clarify whether you can exit the contract without penalty if you feel dissatisfied with the service.

Pay attention to how the CMC communicates potential success. Watch out for bold guarantees or “risk-free” claims that sound too good to be true. Even the strongest undisclosed commission cases might face factual intricacies, potential time-bar issues, or competing legal interpretations. Ethical CMCs will offer realistic assessments, informing you about possible outcomes and the evidence required. If they promise near-certain victory, step back and question the validity of their claims.

Also, remember that you can pursue the Financial Ombudsman Service route without any assistance from a CMC. The FOS is designed to be user-friendly, and many consumers handle claims independently. If a CMC is simply planning to submit the same evidence you already have to the ombudsman—charging a hefty fee for doing so—you might opt to save money by dealing with the ombudsman directly. However, if your case is complex and you prefer professional guidance, a suitably qualified solicitor or an experienced CMC could prove beneficial.

Finally, keep records of all communications with the CMC—agreements, letters of authority, emails, or phone call notes. If a dispute arises—about fees, progress, or the outcome—you should have a clear paper trail. And if the company fails to meet your expectations, you can escalate a complaint to the Financial Ombudsman Service (for CMC service issues) or consider switching to a different representative. In short, using a CMC can simplify your journey, but only if you engage with a reputable, transparent provider.

How firms defend these cases and how to respond

When a borrower or policyholder brings an undisclosed commission claim, the broker or lender often mounts a structured defence. Common tactics include asserting that the consumer had either explicit or implicit disclosure—pointing to generic clauses in the contract stating that some commission “may be paid.” They might also argue the broker did not owe a fiduciary duty, framing their role as purely administrative or an “information provider” rather than an adviser. Overcoming this line of argument typically involves proving the broker’s conduct implied a duty of loyalty or advice.

Another defensive strategy is minimising the commission’s material impact. If the firm can show that the commission was relatively small or that the consumer would not have qualified for better rates anyway, they may claim the arrangement was fair. In these cases, your response should highlight if the omission of disclosure was significant, especially if it skewed the product choice or terms. Summaries of market rates or competitor quotes can help establish how the undisclosed fees inflated your costs.

Time-bar or limitation defences feature prominently. Firms may argue the six-year period under the Limitation Act 1980 has lapsed, or that you should have known about the commission earlier. Respond by detailing any concealment or providing evidence that you only discovered the commissions after the relevant date. If you can demonstrate deliberate concealment by the firm, you could extend the limitation period significantly.

Firms sometimes contest factual issues—such as whether the broker actually received the disputed commission at all. This is where documentary evidence, including subject access request findings, can be vital. Another line of defence might be that even if a commission was undisclosed, it was within industry norms and cannot be deemed unfair. However, the prevailing case law suggests that even if it’s “common practice,” it still risks creating an unfair relationship if insufficiently disclosed.

Respond by meticulously collating evidence that counters each of their points. If they produce partial documents to claim transparency, produce the entire set of communications showing how the fee was never adequately broken down or emphasised. Provide reasoned arguments about how a consumer would reasonably interpret or overlook obscure contract language. And if you suspect the broker took steps to hide the commission—like using coded terms—highlight that as a hallmark of deliberate concealment.

Ultimately, the more thorough your evidence and the clearer your narrative, the more difficult it becomes for the firm to hinge their defence on grey areas or procedural technicalities. Maintaining composure, logic, and an organised approach will go a long way in either an ombudsman or court setting, especially when the firm attempts to muddy the waters through generic disclaimers or disclaiming responsibility for the broker’s actions.

Settlement offers and negotiation tips

In many undisclosed commission cases, firms will propose a settlement rather than risk a final ombudsman decision or a full-blown court trial. Settlement can be an attractive prospect for both parties: the consumer avoids protracted legal processes and potential cost exposure, while the firm manages reputational and financial uncertainty. However, accepting a quick settlement without evaluating its adequacy can leave you short-changed.

If you receive a settlement offer, compare the sum to what you believe you’re owed—often the undisclosed commission plus any interest paid on it, and possibly extra compensation for unfairness or distress. Seek clarity on how they’ve calculated the figure. If the firm’s explanation lacks detail, request a breakdown. A fair settlement might include:

• Refund of the commission or inflated charges

• Interest at a reasonable rate

• Removal or adjustment of negative entries on your credit file

• Possible compensation for inconvenience or distress

Outline your counteroffer if you believe their figure is insufficient. Provide rationale—perhaps referencing your actual financial losses, case law precedents, or the cost you’d incur if forced to litigate. Polite but firm negotiation is typically more productive than hostility. Keep communications written where possible to maintain a clear record of offers and responses.

Remember, you can also settle on a “without prejudice” basis. This means discussions cannot be used as evidence in court if negotiations fail. Once you find a mutually agreeable figure, the firm may present a settlement agreement or deed of release for you to sign. Read it thoroughly—particularly any clauses preventing future claims about the same transaction.

If you’re unsure whether the offer is fair, consult a solicitor or seek guidance from a free advisory service. Some consumers also use alternative dispute resolution methods like mediation to arrive at a figure both sides can live with, though the ombudsman route typically offers a free alternative to such methods. In any settlement scenario, weigh the benefits of prompt closure and guaranteed compensation against the potential for a bigger payout via formal channels. For claimants with a strong case, the firm’s risk of losing might justify a higher settlement. Conversely, if your evidence is limited or your claim borderline, a swift settlement might be the best outcome.

If your claim is rejected or stalled

Often, undisclosed commission complaints hit roadblocks—be it a firm outright denying liability or simply failing to respond effectively. If your claim is rejected internally, check whether the firm has given a final response letter. This letter typically signals that you’ve reached the end of their complaints process, enabling you to escalate to the Financial Ombudsman Service (FOS). If you haven’t yet received a final response and more than eight weeks have passed, you can also approach the FOS.

One reason claims stall is that the firm insists no commission was paid or that any mention of “may receive commission” fulfilled disclosure obligations. If you believe you have evidence (like a lender-broker agreement or a suspicious fee line), you can present this to show the matter remains unresolved. In many cases, a subject access request can help you gather more proof to challenge the firm’s denial.

Should the ombudsman route also fail—either because they find insufficient evidence or you disagree with their decision—revisiting your evidence with fresh eyes is advisable. Possibly, you might strengthen your claim with additional documents or an expert report. You can also explore court action, though you must be mindful of the limitation period. If you had started an ombudsman complaint close to the limitation deadline, check that you still have time to file in court. The law does not always guarantee a “stop the clock” scenario for ombudsman proceedings.

Sometimes, claimants choose to re-lodge the complaint if new evidence emerges or if a relevant court decision changes how undisclosed commissions are interpreted. However, re-lodging might be tricky if a final ombudsman decision is already accepted. Courts also prefer finality, so you need strong grounds—such as fresh evidence—for them to reconsider an issue settled earlier.

A stalled claim might also indicate the need for professional representation. Solicitors can help refine your arguments and gather evidence in a manner that resonates with adjudicators. That said, you should weigh potential legal costs against the strength of your claim and the likely compensation. In summary, rejection is not the end of the road, but it may require a strategic pivot—be it collecting more evidence, exploring alternative routes, or seeking expert advice—to keep your case alive.

Preventing problems on future purchases

While this guide focuses on addressing undisclosed commissions already incurred, there’s substantial value in preventive measures for any future financial, insurance, or retail contracts. First, always ask direct questions: “Are you receiving a commission?” “How is it calculated?” and “Can you provide a breakdown of all fees?” A reputable broker, dealer, or adviser will welcome transparent discussions. Beware of anyone who dismisses your queries or says it’s “not relevant.”

Comparing multiple quotes or offers is another protective strategy. For instance, if you’re shopping around for car finance, request the annual percentage rate (APR) from various dealerships and ask each to explain any associated fees. If one deal stands out as disproportionately expensive—or the intermediary is evasive—consider that a red flag. Online comparison tools can also help you gauge average or typical pricing, serving as a benchmark to spot anomalies.

Review your contractual documentation carefully before signing. Terms like “arrangement fee,” “administration charge,” or “service fee” should be crystal clear in purpose. If they are not, request an itemised explanation. For insurance policies, check if the broker or aggregator site explicitly states how it gets paid. Keep a record of these disclosures, as they could be useful evidence should disputes arise later.

Finally, maintain a habit of revisiting your financial products periodically. Whether it’s an annual mortgage review or an insurance policy renewal, re-check the costs to see if they’ve inflated unreasonably. Hidden commissions sometimes emerge upon renewal when brokers or lenders quietly increase fees. If you notice a jump in premiums, interest, or monthly payments without justification, investigate promptly. Early intervention can prevent larger financial hits and deter unscrupulous practices.

In essence, the best antidote to undisclosed commissions is vigilance and informed purchasing. The more you understand your rights and the typical market practices, the less likely you are to be caught off guard by a hidden fee. By fostering healthy scepticism and demanding full transparency, you empower yourself to make decisions that align with your best financial interests.

Key Takeaways

Undisclosed commissions erode trust in financial transactions and can impose unjust costs on consumers. When you enter into a mortgage, a car finance agreement, or take out an insurance policy, you expect the process to be transparent and equitable. Hidden fees and commissions destroy that pact, often leading to higher costs, compromised advice, and a lingering sense of betrayal once the truth emerges.

Yet the UK’s regulatory and legal framework provides recourse. From claims brought under the Consumer Credit Act’s “unfair relationship” provisions, to common law arguments about fiduciary duties, the courts and ombudsman have consistently affirmed the consumer’s right to full disclosure. Much of the remedy hinges on evidence, so gathering documents, performing thorough checks, and potentially submitting a subject access request can dramatically strengthen your position.

While the path to redress may seem daunting—especially if you’re facing a firm that denies wrongdoing or tries to run out the clock via limitation rules—persistent, informed action can yield results. The Financial Ombudsman Service offers a no-cost avenue for dispute resolution, while the courts provide a more formal route that can establish binding precedents. Funding options such as no win, no fee agreements or claims management companies are available, but weigh their pros and cons to avoid eroding your final compensation.

Finally, the best protection is prevention. By cultivating an inquisitive, informed mindset, you reduce your risk of becoming entangled in unscrupulous deals in the first place. As you navigate the complexities of finance and insurance, remember that undisclosed commissions are never a trivial matter. They strike at the core of fairness and accountability—and you hold the right to challenge them.

Frequently asked questions

Basics

Spotting issues & gathering evidence

Legal principles

Time limits & limitation

Motor finance

Mortgages & secured loans

Insurance & add‑ons

Complaints & the ombudsman

Court litigation

Data & SARs

Redress & money

Credit files & tax

Multiple parties

Insolvent or closed firms

Using representatives

Scotland & Northern Ireland

After a rejection

Glossary

Useful organisations

Financial Ombudsman Service (FOS)

Independent, free service that resolves disputes between consumers/small businesses and regulated financial firms by deciding what’s “fair and reasonable.” Use it after you’ve complained to the firm and are unsatisfied or 8 weeks have passed.

• 0800 023 4567
• www.financial-ombudsman.org.uk

Information Commissioner’s Office (ICO)

UK regulator for data protection and information rights. Provides guidance on subject access requests (SARs) and takes complaints if an organisation mishandles your data or ignores a valid SAR.

• 0303 123 1113
• ico.org.uk

Financial Services Compensation Scheme (FSCS)

The statutory scheme that may compensate customers if an authorised financial firm fails and cannot meet claims, within eligibility limits and coverage categories.

• 00 678 1100
• www.fscs.org.uk

Financial Conduct Authority (FCA)

UK regulator setting and enforcing conduct rules (e.g., CONC, ICOBS, MCOB) and overseeing sector‑wide issues such as the ban on discretionary commission arrangements in motor finance.

• 0800 111 6768
• www.fca.org.uk

Citizens Advice

Independent charity offering free, confidential advice. The consumer helpline can guide you on next steps and your rights around undisclosed commissions and complaints.

• 0808 223 1133
• www.citizensadvice.org.uk

The Law Society (England & Wales)

Representative body for solicitors. Use Find a Solicitor to locate regulated legal support experienced in financial disputes.

• 020 7320 5650
• www.lawsociety.org.uk

MoneyHelper

Free, impartial money and debt guidance, including updates on motor‑finance commission complaints and practical planning help.

• 0800 138 7777
• www.moneyhelper.org.uk

All references

Still have questions?

If you still have concerns or queries about undisclosed commissions and how they might affect your own circumstances, you do not have to navigate this alone. Speaking with an expert can provide tailored guidance on your specific situation. An expert can assess your documentation, advise on the strength of your potential claim, and help you decide whether to proceed via the Financial Ombudsman Service or the courts.

Your first consultation is free, and discussing your case with a professional can lend clarity to any complex issues or unusual contract terms. If you suspect you may have paid more than you should or that a financial intermediary withheld crucial information, consider contacting an expert now to explore your options for redress.