New rules set to protect car buyers from dealership finance rip-offs

New rules set to come into force in the new year will help protect drivers from unscrupulous dealers trying to trick them into overpriced finance deals.

From January 28, the new guidelines from the Financial Conduct Authority (FCA) will ban dealers from linking commissions to finance rates and force them to increase clarity around the commissions they make.

The rules outlaw the use of “discretionary commission models” which allows dealers and finance brokers to set their customers’ interest rates then earn a commission linked to that rate. A higher interest rate results in a higher pay-out for the dealer or broker but costs the buyer more.