Discover how the FCA ruling and Consumer Duty changed car finance, and why arranging online car finance before visiting a dealer gives you more control.
The traditional UK car dealership experience used to follow a predictable script. You picked a vehicle, took it for a test drive, and then sat down at the finance desk to work out monthly payments.
That final step still exists, but it’s a very different conversation now, thanks to regulatory shifts that have quietly rewired how British motorists fund their cars. Let’s take a closer look at what’s actually changed, what hasn’t, and where the balance of power now sits.
How Regulations Fixed a Broken System
New Rules for Dealer Commissions
For years, the finance desk was one of the most profitable corners of the showroom. Many dealers used discretionary commission arrangements, which let sales staff nudge the interest rate on a car loan upwards to boost their own commission.
The Financial Conduct Authority (FCA) banned this practice from 28 January 2021, after a review of the motor finance market found that customers on discretionary deals were paying an estimated £165 million a year more than they needed to.
Clear Standards Under Consumer Duty
The FCA then went further with the Consumer Duty, which came into force for open products on 31 July 2023 and for closed products a year later. The Duty pushes firms to deliver good outcomes, offer fair value and give customers information they can actually act on, which limits the scope for hidden markups at the finance desk.
Car Dealers Lose Grip on Motor Finance
The regulatory changes have reshaped how the finance desk works, even if they haven’t killed it off. Finance and Leasing Association (FLA) figures show point-of-sale consumer car finance new business held broadly steady at around £39 billion in 2024, with volumes down about 2% on the year. So dealer finance hasn’t collapsed, but the easy discretionary margin has gone, and the way it’s sold has had to change.
Reports around dealer networks also point to steady consolidation, driven by tight vehicle margins, the shift to EVs, agency-model launches from brands like Mercedes-Benz, and new Chinese entrants taking showroom space. Losing the reliable uplift from the finance desk has added to that pressure. Sales staff who used to have real freedom over rates now work within tighter compliance controls set by the lenders behind them.
The picture got more complicated in October 2024, when the Court of Appeal ruled that any commission paid by a lender to a dealer without the customer’s fully informed consent was unlawful, not just discretionary arrangements.
The Supreme Court gave its judgment in August 2025, and the FCA has since confirmed an industry-wide redress scheme covering agreements between 2007 and 2024, with firms expected to pay out around £7.5 billion in compensation. Parts of the scheme are currently suspended following a legal challenge, but the FCA has said it will defend it. Whatever the final scope, dealers can no longer treat commission as a quiet back-office matter.
Why Buyers Choose to Fund Vehicles First
With the finance desk under more scrutiny, buyer habits are shifting too. Instead of waiting until they’ve found a vehicle before thinking about money, a growing share of buyers now line up their funding first, either through their own bank, a broker or a direct lender. Securing online car finance before you shop puts you in a stronger negotiating position and eliminates the pressure-sales environment of the dealer finance desk.
When you walk in with a pre-approved budget, you can focus purely on the price of the car itself. It also stops salespeople from muddying the waters by mixing the vehicle’s price with complicated monthly payment terms.
What Remains Unchanged for Car Buyers
Even with all of this, some parts of the buying journey haven’t shifted. Dealers still need to move stock off the forecourt, and they’ll still try to add extras at the end. You’ll still hear pitches for paint protection, extended warranties and GAP insurance, though GAP itself has been through its own FCA review and looks very different from the product it was a few years ago.
Showrooms also still lean heavily on part-exchange, since used stock remains a strong margin line for them. Having your funding sorted doesn’t mean you can’t negotiate on your old car. If anything, knowing your exact budget makes it much easier to see whether a dealer’s part-exchange offer stacks up.
Who Really Owns the Finance Conversation Now
The finance desk hasn’t died, but it’s lost the quiet control it used to have. Buyers are no longer at the mercy of opaque commission structures, and the pressure now sits on lenders and dealers to justify what they charge and why.
By sorting funding out early, motorists get a calmer conversation on the forecourt and a clearer view of the real cost of the car. The competitive pressure that puts on lenders is arguably the healthiest change of the lot.