Cazoo, an online used car retailer with a home delivery model, has recently been implicated in the Financial Conduct Authority's (FCA) investigation into discretionary commission arrangements (DCAs) related to motor finance agreements. This investigation covers the period from 6 April 2007 to 1 November 2024 and involves an estimated 14 million car finance agreements worth £8.2 billion (FCA estimate). As a dealer group, Cazoo arranges financing through various lenders for customers purchasing vehicles like Ford, Volkswagen, BMW, Audi, Mercedes-Benz, Kia, Hyundai, Nissan, Vauxhall, and Toyota.
Who is Cazoo?
Cazoo is an online retailer of used cars that operates across the UK. The company offers a unique home delivery model, ensuring customers can receive their new vehicle at home without needing to visit a dealership. Originally listed on the New York Stock Exchange (NYSE), Cazoo later went private and expanded its inventory to include various brands such as Ford, Volkswagen, BMW, Audi, Mercedes-Benz, Kia, Hyundai, Nissan, Vauxhall, and Toyota.
How Does Cazoo Finance Agreements Work?
When purchasing a car from Cazoo, customers have the option of financing their purchase through PCP (
Personal Contract Purchase) or HP (
Hire Purchase). Cazoo arranges these finance agreements on behalf of lenders such as
Black Horse,
[Close Brothers](https://mlj.org.uk/lenders/close-brothers-motor-finance),
MotoNovo, and
Santander Consumer Finance. The dealer receives commission based on a discretionary arrangement with the lender, which can influence how they present financing options to customers.
The FCA Investigation into Discretionary Commission Arrangements
The FCA investigation highlights concerns about discretionary commission arrangements (DCAs) used by car dealers like Cazoo in offering finance agreements. These DCAs involve arrangements where lenders pay additional commissions to dealers based on customer outcomes, potentially incentivising practices that could be detrimental to customers. The investigation covers an estimated 14 million car finance agreements worth £8.2 billion (FCA estimate), raising questions about the fairness and transparency of these arrangements.
How to Check if Your Cazoo Finance Agreement is Affected
To determine whether your Cazoo finance agreement is affected by the FCA investigation, you should review your paperwork carefully. Look for details such as the name of the lender, the interest rate on your loan, and the dates of the finance agreement. If any discrepancies or concerns arise based on these documents, it may indicate that your financing was arranged under a discretionary
commission arrangement.
If you suspect your Cazoo finance agreement is affected by DCAs, the first step is to identify your lender from your finance paperwork. Once identified, you should directly complain to your lender regarding any issues or concerns you have with your financing terms. It’s important to remember that you can file a complaint directly to your lender for free without needing to use a
claims management company.
After filing your initial complaint, if the issue is not resolved within eight weeks, you may escalate it to the [Financial Ombudsman](https://mlj.org.uk/guides/financial-ombudsman-service) Service (FOS) for further review. This service provides independent resolution and can offer guidance on how to proceed with your complaint effectively. Remember, using a claims management company is unnecessary as you are entitled to complain directly to your lender without incurring additional costs.
Sources and References
- FCA investigation into discretionary commission arrangements: https://www.fca.org.uk/
- Cazoo website: https://www.cazoo.co.uk/