FCA Investigation - Car Finance

[GG.]

Has anyone on here looked into this/pursued a claim? Relevant for car finance agreements (PCP and HP) between 2007 and 2021.

I have contacted the dealership re the HP I took out on the 997 in 2016 to check if it was subject to a "discretionary commission agreement". It was with IMF which is a subsidiary of BlackHorse (Lloyds) who are implicated as an institution.

If this was the case the average overpayment on 10k over 4 years is supposedly £1,100 so for me it could be £3,000+. Apparently 40% of loans were affected and may be within scope...

[jamcg]

There’s a letter on money saving expert to send off to the finance companies. I had a couple with Skoda (vw) financial services so sent it off to no joy, which ultimately is a good thing

[GG.]

You may still have joy yet - the initial investigation was in relation to the jacking up of rates to earn additional commission but they may be expanding that to non-disclosure of any commission which would affect 90% of policies rather than 40%.

The dealer I bought the car from is an FCA registered broker so they should respond to my query in the first instance but failing that I will also approach IMF / Blackhorse.

I get the feeling that someone like VWFS are less likely to be affected rather than when you're getting finance from a third party dealer selling second hand cars...

[Jimexpl]

Has anyone on here looked into this/pursued a claim? Relevant for car finance agreements (PCP and HP) between 2007 and 2021.

I have contacted the dealership re the HP I took out on the 997 in 2016 to check if it was subject to a "discretionary commission agreement". It was with IMF which is a subsidiary of BlackHorse (Lloyds) who are implicated as an institution.

If this was the case the average overpayment on 10k over 4 years is supposedly £1,100 so for me it could be £3,000+. Apparently 40% of loans were affected and may be within scope...

I hadn't picked up that they were taking complaints from before the ban now. I'm pretty sure the two cars that I had 2017-21 won't have anything worth trying to claim for.

Back in 2004-2006 when I was a business manager at the leading London premium car delaer group there was a simple commission box on most lender finance software - you either typed in the amount of commission you wanted to make or increased the interest rate on the slider until that figure was reached.
We were targeted on £650 per unit and 40% finance penetration back then, so you needed to make about £1500 a unit on the clients taking finance to hit targets. I did my business manager training with Black Horse - My memory of the one week course was trying to talk to the customer about 'flat rate' of interest rather than APR and making them feel that the potential for a heart attack or cancer meant that payment protection was a great idea as they would recover due to marvellous modern medicine curing them AND the car loan would be paid off!

If the customer was happy to pay the price then is the dealer really at fault? The front page of the finance agreements I sold clearly stated the interest rate and charges, and even back in 2004 five minutes on the internet would give you comparable loan quotes from high street banks. I guess a local cheap used car lot might have been mis-selling to a certain customer demographic.

I'm not knocking you for trying - I'm happy for anyone to get a refund from a bank!

[GG.]

Back in 2004-2006 when I was a business manager at the leading London premium car delaer group there was a simple commission box on most lender finance software - you either typed in the amount of commission you wanted to make or increased the interest rate on the slider until that figure was reached.
We were targeted on £650 per unit and 40% finance penetration back then, so you needed to make about £1500 a unit on the clients taking finance to hit targets. I did my business manager training with Black Horse - My memory of the one week course was trying to talk to the customer about 'flat rate' of interest rather than APR and making them feel that the potential for a heart attack or cancer meant that payment protection was a great idea as they would recover due to marvellous modern medicine curing them AND the car loan would be paid off!

If the customer was happy to pay the price then is the dealer really at fault? The front page of the finance agreements I sold clearly stated the interest rate and charges, and even back in 2004 five minutes on the internet would give you comparable loan quotes from high street banks. I guess a local cheap used car lot might have been mis-selling to a certain customer demographic.

I'm not knocking you for trying - I'm happy for anyone to get a refund from a bank!

Yes the average customer would not assume you are backfilling a comission target by ratcheting up the interest. They would assume that the interest rate is a function of competition between lenders in the market and the risk profile of the customer. You may then get a small percentage as commission but not as a function of artificially making the finance more expensive - I would expect that to be the lender paying you a small cut out of the normal rate they would offer. With a regulated business dealing with a consumer, transparency is key so I'm not surprised these claims are being brought. Just stating the interest rate and fees on the front is not sufficient disclosure that you've been incentivised to make the the agreement more expensive.

The fact that you can check or obtain bank finance isn't going to cut it either in the context of a captive audience which is inclined to take the dealers product - organising car finance with a third party broker and arranging for them to wire money across is a massive faff compared to the dealer doing it for you so clearly it isn't a fluid competitive market with external lenders but closer to a tied deal. If you're getting third party car finance (often above the limit for unsecured personal loans), the high street clearing bank market is not a true comparable anyway so you're back in the realm of arranging through a broker who is doing the same thing...

[Brannen]

I did the MSE email generator thing a while back. I just got a generic reply from BMW Finance for the 2 cars I bought through them. I assumed you'd have to wait to the decision before any potential next steps / refunds would be given. Not really expecting much to be honest. I think I got about £600 back on the payment protection claim years ago, so it was worth just sending an email on the off chance.

[Zonda_]

I've had several responses acknowledging I have a legitimate claim, just waiting to see how much they're worth now. I got £5k from the PPI this so I'm hopeful!

[Swervin_Mervin]

We've wondered whether to enquire in relation to the Skoda, but haven't been arsed to pull our fingers out yet.

[Jimexpl]

Back in 2004-2006 when I was a business manager at the leading London premium car delaer group there was a simple commission box on most lender finance software - you either typed in the amount of commission you wanted to make or increased the interest rate on the slider until that figure was reached.
We were targeted on £650 per unit and 40% finance penetration back then, so you needed to make about £1500 a unit on the clients taking finance to hit targets. I did my business manager training with Black Horse - My memory of the one week course was trying to talk to the customer about 'flat rate' of interest rather than APR and making them feel that the potential for a heart attack or cancer meant that payment protection was a great idea as they would recover due to marvellous modern medicine curing them AND the car loan would be paid off!

If the customer was happy to pay the price then is the dealer really at fault? The front page of the finance agreements I sold clearly stated the interest rate and charges, and even back in 2004 five minutes on the internet would give you comparable loan quotes from high street banks. I guess a local cheap used car lot might have been mis-selling to a certain customer demographic.

I'm not knocking you for trying - I'm happy for anyone to get a refund from a bank!

Yes the average customer would not assume you are backfilling a comission target by ratcheting up the interest. They would assume that the interest rate is a function of competition between lenders in the market and the risk profile of the customer. You may then get a small percentage as commission but not as a function of artificially making the finance more expensive - I would expect that to be the lender paying you a small cut out of the normal rate they would offer. With a regulated business dealing with a consumer, transparency is key so I'm not surprised these claims are being brought. Just stating the interest rate and fees on the front is not sufficient disclosure that you've been incentivised to make the the agreement more expensive.

The fact that you can check or obtain bank finance isn't going to cut it either in the context of a captive audience which is inclined to take the dealers product - organising car finance with a third party broker and arranging for them to wire money across is a massive faff compared to the dealer doing it for you so clearly it isn't a fluid competitive market with external lenders but closer to a tied deal. If you're getting third party car finance (often above the limit for unsecured personal loans), the high street clearing bank market is not a true comparable anyway so you're back in the realm of arranging through a broker who is doing the same thing...

I think it is very market dependent- my BM time was spent at Volvo or Land Rover in central London. Virtually none of the customers needed finance, so the rates had to be attractive to entice them into keeping their money and using the finance house. I never enjoyed the role, but it was a necessary posting before they’d let me manage a dealership.
In the monthly meetings at HQ business managers were questioned by the finance director if a deal had gone through with significant commission in it, as they were concerned about it being mis-sold. Clearly this will not have happened at other dealerships.

[Rich B]

I had no finance during that period and also i always refused the silly PPI offers.

i don’t know if that makes me happy i never got caught out or sad that i can’t make any claims!

[GG.]

Making a claim for reimbursement of money you never knew you were swindled out of is the legal equivalent of finding a £20 note in the pocket of a jacket you haven't worn since last year... except in this case it might be 165 £20 notes

[dinny_g]

swindled

We can thank Martin Lewis for stoking this type of emotion around this.

Bottom line is that this, along with a few other FCA initiatives, are going to make it harder, and more expensive to get finance in future.

A few thousand get a windfall, the remaining millions pay the price.

[Holley]

I think most of us knew that car dealers could amend the interest rate, it was part of the negotiations!

But they should really disclose commission in the same way mortgage brokers have to.

I'm pretty sure there were reports that SJP had hidden fees on pension/investment plans. I wonder if this will be another future pay-out!

[dinny_g]

But they should really disclose commission in the same way mortgage brokers have to.

They disclosed exactly what they were informed to disclose by the FCA. Their documentation was fully FCA complaint

[GG.]

But they should really disclose commission in the same way mortgage brokers have to.

They disclosed exactly what they were informed to disclose by the FCA. Their documentation was fully FCA complaint

I'm not sure you can say that as a general statement.

Ultimately, from a common sense perspective - when I go to a broker I would expect they would get a commission. What I would not expect is that they deliberately made the products more expensive to increase that commission. Ultimately the broker is in a sensitive position in that they ostensibly hold themselves out as working for you and that is why the latest cases have held that they owe the customer a fiduciary duty to act in their interests. Making their loans more expensive to profit from that in a way that is not clearly disclosed is clearly not doing that. The FCA rules in themselves are not the be all and end all of whether something improper has been done at common law. Maybe some financial intermediaries think that but it isn't correct.

[V8Granite]

I had no finance during that period and also i always refused the silly PPI offers.

i don’t know if that makes me happy i never got caught out or sad that i can’t make any claims!

Be happy the money you didn’t lose was happily being spent on fizzy pop and nights out.

Dave!

[IanF]

Hmmm.. I may have fallen victim to this. Problem is all my documents are in my ex’s house! Not sure it’s worth the hassle

[Ascender]

This has been on my todo list for a while - just to send some letters off and see what happens, there's no harm in doing it yourself when Moneysavingexpert makes it so easy.

[Zonda_]

Hmmm.. I may have fallen victim to this. Problem is all my documents are in my ex’s house! Not sure it’s worth the hassle

You don't need any documents, I didn't have mine, couldn't even remember reg numbers!

[Brannen]

Hmmm.. I may have fallen victim to this. Problem is all my documents are in my ex’s house! Not sure it’s worth the hassle

I didn't have the documents to my first BMW Finance. I just provided the car reg (had to find a picture of the car as I couldn't remember the reg ) and address at the time of the finance. BMW Finance replied with the agreement number / details for that car. Might be possible with the other finance companies. If you can be bothered filling out the Money Saving Expert form, it shouldn't take more than 10 mins.