MotoNovo Up for Sale: What the Car Finance Scandal Means for You

The Story That Should Have Every Driver's Attention

Imagine taking out car finance in good faith, making every payment on time, and then discovering that somewhere in the small print — buried beneath layers of broker arrangements and commission agreements — a decision was made that cost you hundreds, possibly thousands of pounds. You didn't know it was happening. Your dealer didn't tell you. And the lender? Well, they were quite happy for things to stay that way.

That's the uncomfortable reality sitting at the heart of the UK's car finance mis-selling scandal, and it's a story that just got significantly more dramatic. MotoNovo Finance, one of the UK's most prominent car finance lenders, has been put up for sale by its South African parent company FirstRand — a move that comes directly in the wake of the Financial Conduct Authority's (FCA) proposed redress scheme. This isn't a routine business restructuring. It's a company choosing to exit the UK market rather than face what could be an enormous compensation bill.

So what exactly has happened, why does it matter, and — crucially — what should you do if you've ever financed a car in the UK? Let's break it down.

What Happened: MotoNovo Heads for the Exit

As reported by Auto Express, FirstRand — the South African banking group that owns MotoNovo — has placed the lender up for sale following the FCA's announcement of a formal redress scheme related to discretionary commission arrangements (DCAs) in car finance. MotoNovo is one of the lenders most deeply implicated in the scandal, having used DCAs extensively before they were banned in January 2021.

FirstRand had already set aside significant provisions — reportedly in excess of £1 billion across its UK operations — to cover potential compensation payouts. But rather than weather the storm, the group appears to have decided that the financial and reputational risk of remaining in the UK motor finance market simply isn't worth it. The sale process is now underway, though no buyer has yet been confirmed publicly.

This is a remarkable development. MotoNovo isn't a fringe lender — it has been one of the most active players in the UK's point-of-sale car finance market, funding deals through thousands of dealerships across the country. Its potential exit is a signal of just how serious the fallout from the DCA scandal has become.

Why It Matters: The Bigger Picture Behind the Sale

To understand why this is such a significant moment, you need to understand what discretionary commission arrangements actually were — and why the FCA eventually decided to ban them.

Under a DCA, car finance brokers (typically the dealership selling you the car) were given the power to set the interest rate on your finance agreement, within a range set by the lender. Here's the critical part: the higher the interest rate the broker set, the more commission they earned. This created a direct financial incentive for dealers to charge customers as much interest as possible — and customers had absolutely no idea this was happening.

The FCA banned DCAs in January 2021, but the damage was already done. Millions of car finance agreements signed before that date may have been affected. The FCA subsequently launched a review, and in January 2024, the Court of Appeal ruled in a landmark case (Johnson v FirstRand Bank Ltd & Others) that lenders had a legal duty to disclose commission arrangements to customers — and that failing to do so was unlawful. The Supreme Court is expected to deliver its final ruling on the matter later in 2025, but the direction of travel is already clear.

The FCA's proposed redress scheme, which triggered MotoNovo's sale process, would require lenders to proactively contact affected customers and offer compensation — rather than waiting for individual complaints to trickle through. The scale of potential payouts has been compared to the PPI (Payment Protection Insurance) scandal, which ultimately cost UK banks over £50 billion. Some analysts believe the car finance redress could reach £30 billion or more.

MotoNovo's decision to sell, rather than face that bill head-on, tells you everything you need to know about how seriously the industry is taking this.

The Legal Angle: Your Rights Under UK Law

This is where things get particularly important for drivers. The legal framework underpinning the car finance scandal draws on several key pieces of UK legislation and regulatory guidance.

The Consumer Credit Act 1974 governs most car finance agreements and gives consumers significant protections, including the right to challenge agreements that are "unfair" under Section 140A. This provision allows courts to reopen credit agreements where the relationship between lender and borrower is deemed unjust — and undisclosed commission arrangements are precisely the kind of thing that can make a relationship unfair.

The FCA's Consumer Duty, introduced in July 2023, now requires financial firms to act in customers' best interests and deliver good outcomes. While this doesn't apply retrospectively to historical agreements, it sets the standard against which current conduct is judged and reinforces the principle that hidden commissions are fundamentally incompatible with fair dealing.

The Court of Appeal's ruling in Johnson v FirstRand Bank Ltd (which directly involved FirstRand — MotoNovo's parent company) established that a broker acting as a credit intermediary owes a fiduciary duty to the customer, and that a lender who pays a secret commission to such a broker is liable to the customer for that commission. This is a profound legal shift. It means that affected customers don't just have a complaint — they potentially have a legal claim.

The Supreme Court's forthcoming judgment will either confirm or modify this position, but legal experts broadly expect the outcome to favour consumers. The FCA has already signalled that it will implement a formal redress scheme once the Supreme Court has ruled.

What Drivers Should Know: Practical Steps Right Now

If you've financed a car in the UK — particularly between 2007 and January 2021 — there are concrete steps you can take right now.

1. Check whether your agreement involved a discretionary commission arrangement This isn't always easy to establish from your paperwork alone, but you can write to your lender and request a copy of your original credit agreement, along with details of any commission paid to the broker. Lenders are legally required to respond within 40 days under a Subject Access Request (SAR) made under the UK GDPR.

2. Raise a formal complaint with your lender You don't need to wait for the FCA's redress scheme to be finalised. You can submit a complaint to your lender now. Lenders are currently pausing final responses on DCA-related complaints pending the Supreme Court ruling, but submitting your complaint establishes your position in the queue and protects your rights.

3. Keep records of all correspondence If MotoNovo or any other lender is sold, your complaint rights transfer with the business. However, keeping your own records means you're not reliant on any new owner to have maintained accurate files.

4. Escalate to the Financial Ombudsman Service (FOS) if necessary If your lender fails to respond or rejects your complaint, you can refer the matter to the FOS. Given the volume of cases, waiting times are significant — but the FOS has confirmed it is actively handling DCA complaints.

5. Be cautious of claims management companies A wave of claims management firms has emerged offering to pursue car finance compensation on your behalf — typically for a fee of 20–30% of any payout. You are entitled to make a complaint entirely for free, directly to your lender and the FOS. Using a claims firm is your choice, but understand you may be handing away a substantial chunk of any compensation you're entitled to.

Looking Ahead: A Market in Flux

MotoNovo's potential sale is unlikely to be the last significant corporate casualty of the car finance scandal. Several other major lenders — including Close Brothers and Santander Consumer Finance — have also set aside substantial provisions and face similar exposure. The broader motor finance market is bracing for a period of significant disruption.

For consumers, the short-term picture is one of uncertainty but genuine opportunity. The FCA's redress scheme, once confirmed, should make the process of claiming compensation more straightforward — potentially automatic, without the need for individual complaints. That would be a significant departure from the PPI experience, where millions of eligible customers never came forward.

What MotoNovo's exit really illustrates is the scale of what went wrong. This wasn't a minor regulatory technicality — it was a systematic practice that saw millions of ordinary drivers quietly overcharged on their car finance, often without any awareness that it was happening. The fact that a major lender is now choosing to leave the market rather than face the consequences speaks volumes.

If you financed a car before January 2021, the message is simple: don't assume you weren't affected, and don't wait to find out. The redress process is moving, the legal framework is increasingly in consumers' favour, and the window to make your voice heard is open. Use it.