One in five UK car buyers say hidden fees left them feeling frustrated on their vehicle purchase – here’s how clear finance disclosure can help close that gap.
Last edited 30/09/2026
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An Initial Disclosure Document (IDD) in car finance is the standard way credit brokers meet their disclosure obligations. It clearly sets out who the firm is, whether it works with one or several lenders and how a firm is paid, including any fees and commission. Done well, it reduces complaints and regulatory risk, builds trust and supports car finance transparency.
Our UK vs European car buyer trends and finance behaviour report found trust and transparency are a top priority for UK car buyers in 2026. Yet, one in five (19%) say they felt frustrated by hidden fees when purchasing their last vehicle. For retailers and lenders, building trust through transparency is essential for protecting brand reputation and driving conversions.
This article looks at how hidden costs erode consumer trust in finance products and the potential impact on automotive businesses. It also explores how an effective Initial Disclosure Document (IDD) can support retailers and lenders by meeting consumers’ need for car finance transparency.
An Initial Disclosure Document (IDD) is a document consumers receive from a credit broker before entering a financial agreement. It outlines who the firm is, what it charges, and how it’s paid, and is designed to ensure the customer understands the relationship before committing to anything. Brokers are required to make certain disclosures, and the IDD is the industry standard approach to doing so.
To meet credit broker disclosure requirements in line with the FCA’s CONC 4.5 and The Consumer Credit Act 1974, an IDD in car finance typically covers:
Among the UK consumers who wouldn’t consider using finance to purchase a vehicle in our research, two in five (41.1%) cited concerns around high interest rates or hidden fees as their reason.
This means that a meaningful share of potential customers, are opting out before they’re even a prospect. Simply because they don’t believe the cost advertised is the actual amount they will pay.
While an IDD is delivered when the customer has already entered the finance journey, their positive experience helps build a positive reputation over time.
Nearly two thirds (64%) of UK car buyers rated ‘transparency and clarity of finance/payment terms’ a nine or 10 out of 10 in importance. Against the 19% who actually felt blindsided by hidden costs, that’s the expectation vs experience gap the industry needs to close – and transparent disclosure is how to close it.
That gap doesn’t stay contained to a specific customer, either. Over one in three (34.1%) UK buyers say they rely on speaking to friends and family for recommendations when researching a car. So, a customer who feels misled is not just unlikely to return, but they could be sharing their experience with the next prospective buyer.
Every complaint that escalates to the Financial Ombudsman Service (FOS) costs your business time, regardless of its outcome. As part of that process, the FOS requests the initial disclosure documentation as evidence. Therefore, a thin or inconsistent IDD can make the complaints process more challenging.
It’s important to note that while the retailer delivers the IDD to the buyer, legal liability for an unfair relationship claim, under the Consumer Credit Act, sits with the lender. This is because the lender is answerable for things done on its behalf, including by the broker. The broker still has its own regulatory obligations and can receive their own complaints.
Following the FCA’s motor finance redress scheme from earlier this year, which covers historic agreements, disclosure gaps are under more scrutiny now than they were a few years ago, making this even more important today.
A good Initial Disclosure Document can make the whole finance conversation clearer, for everyone in it. Three things make the difference: how plainly it’s written, when it’s presented and whether you can prove what was disclosed. It also supports the FCA’s Consumer Duty, which expects firms to communicate in a way customers can understand and act on.
Here’s what makes an IDD in car finance useful for you and your customer:
To meet the FCA’s requirement of ‘prominently disclosing’ the information, plain language is critical. All commission and fees should be stated as their own clear point, rather than being folded into general terms and conditions. That way there’s no chance it could be considered a ‘hidden cost’ later in the journey.
The FCA requires disclosure to be presented ‘in good time before’ the agreement. That means, enough time for the buyer to ask questions, compare elsewhere or walk away if they choose to.
Presenting the IDD at the point of application, not at the signing stage or folded into paperwork at the point of purchase, separates disclosure from the final purchase moment.
Demonstrating to FOS that your business has a standard IDD template, isn’t enough. You need to be able to show the specific disclosure that was provided to the individual customer, should a complaint be made.
Auditable record-keeping therefore helps protect your business. Retail platforms that run the disclosure process for you, make it seamless by automatically creating a traceable record. Yet, responsibility for the content and timing of the disclosure stays with the retailer.
In Codeweavers’ Point of Sale and CommerceHub platforms, all IDD sends are timestamped within each customer’s individual file, making it easy for you to share should you need to.
An IDD in car finance isn’t just about being compliant; it can be a competitive advantage.
Presenting the IDD before the signing stage, in plain language and as separate documentation, turns a legal minimum requirement into something that really matters to the customer.
That distinction matters because buyers already rank transparency near the top of what they want when financing a vehicle. A retailer or lender who visibly and consistently delivers on it, is meeting the thing customers say matters most.
Doing so deal after deal is what turns effective compliance into a long-lasting competitive advantage, rather than a one-off good impression. That reputation is exactly what determines whether the next prospective buyer trusts finance enough to engage at all.
“Good disclosure is about making sure customers understand how the firm they’re dealing with is paid, early enough to act on it. Businesses that treat it that way are better placed to show the fair outcomes the FCA now expects.”
– Navinder Aujla. Group Finance Compliance Manager, Cox Automotive
That said, disclosure at the point of finance is only one part of the automotive finance compliance picture. How finance is advertised and the wider standard of fair customer outcomes required by the Consumer Duty across the relationship are also critical to building long-term trust in car finance.
Below is a quick checklist for an effective IDD in car finance. To ensure your Initial Disclosure Document is up to legal standards, please refer to the FCA’s requirements in detail:
Explore more findings from the UK vs European car buyer and finance behaviour report, covering how UK and European buyers approach car finance and buying journeys.
See how Point of Sale or CommerceHub helps retailers manage disclosure records with ease.
Initial Disclosure Document FAQs
An Initial Disclosure Document (IDD) in car finance is given to a customer from a credit broker (often the retailer), before entering a financial agreement such as a Personal Contract Purchase (PCP), Hire Purchase (HP), or lease. It outlines who the firm is, whether they work with one or more lender and how it’s paid, including any fees and commission.
Whilst there is no legal requirement for a document called an IDD, the credit broker does have a legal duty to make the disclosures an IDD contains, and the IDD is the standard way of doing so.
The responsibility to disclose sits with the broker, which in most car finance sales is the retailer. However, the lender is still liable for effective disclosure documentation even if the broker delivers it, including through an unfair relationship claim should the broker’s disclosure falls short.
The lender has its own disclosure obligations, such as disclosing the total cost of credit, which is separate from a broker’s IDD duty.
To meet regulatory requirements, an IDD in car finance should include the firm’s identity and regulatory status, whether it works with one or more lender, any fee charged to the customer, the existence of any commission and if it could affect the customer’s payments, and a customer’s right to complain to the Financial Ombudsman Service (FOS).
Customers who weren’t presented with an IDD or felt it was inadequate can complain to the firm, and then to the Financial Ombudsman Service (FOS) if required. The FOS then decides what is fair and reasonable, considering whether the missing or inadequate disclosure made the finance agreement unfair to the customer.
For history agreements covered by the FCA redress scheme, if there’s no record that a disclosure was provided, inadequate disclosure is presumed by default. If it’s found to be unfair, the business may owe redress.
Car buying journey, Car Finance
