Car finance - hidden commission payments

[pork911]

phpe said:

pork911 said:

sugerbear said:

Fixed rate commission is fair enough (based on the size of the loan).

But the seller being able to set their own commission based on the % they can hawk to? That is outrageous.

Should prices be fixed by the state?

No - they should be determined independently (as is now the case from 2021 onwards) by the finance company itself, and not by the hidden influence of the car dealer.

Finance companies are independent? And can fix prices?

[pork911]

CoolHands said:

Forester1965 said:

The customer walks in, gives his details and the salesman says "Great news! You can get 5%, you must have a great credit score!". It's deceptive. The customer had no way of finding out they qualified for the lower rate.

What, other than look at other available loans? If the customer was happy at 5% and that was lower than any other deal they could get with any other lender then where’s the offence.

I look forward to telling any seller of anything they must price match the lowest available anywhere.

[pork911]

Chainedtomato said:

pork911 said:

Chainedtomato said:

Logged emails with the finance providers as I had 6 agreements in the timeframe being reported. Fantastic free tool from Martin Lewis to generate the email templates. Mine were all new cars with Ford/ VWFS and I read the paperwork throughly back to back before signing, but of course I may have missed something.

In the unlikely situation I’m owed something, then it was hidden in the paperwork in a way which I would call deceitful

Were you happy with the price on each of your 6 cars?

Yes, I was happy with the deal on each of the 6 occasions so I proceeded.

That’s not the point though

It is absolutely is the whole point.

[FourGears]

So the consumer of 2024 and beyond gets to pay the price. How wonderful

[phpe]

The only view that matters is that of the regulator, the FCA.

It has already looked at the practice in detail, decided it caused consumers harm and banned it in 2021.

What is happening now, until September 2024, is that it has allowed the finance companies a temporary pause in responding to complaints whilst it reviews what, if any, standard method of assessing the value of potential harm should be

[fourstardan]

phpe said:

The only view that matters is that of the regulator, the FCA.

It has already looked at the practice in detail, decided it caused consumers harm and banned it in 2021.

What is happening now, until September 2024, is that it has allowed the finance companies a temporary pause in responding to complaints whilst it reviews what, if any, standard method of assessing the value of potential harm should be

Optimists view is they know its going to hit them hard and it's giving them enough time to prepare the outfall.

I'm wondering how you could have had % markup whacked on if it was VWFS myself, I could see this being more of an impact to independent used car dealerships like Arnold Clark.

[KingNothing]

Funny how the FCA can deem it wrong with examples of how it was manipulated and misrepresented, but there are still carsales bootlickers on here using all sorts of mental gymnastics to try and justify the scummy behaviour of car salesmen as alright, hilarious, ohh no, the saintly car salespeople have had some semblance of morals forced on them by the FCA, the horror, I'm sure they still have enough underhanded tactics in their armoury (or come up with new ones) to ensure they get paid above all else, I doubt many will shed a tear for them.

Yes, people know car sales make a profit, except for a few lunatics who thinks people shouldn't make profit on anything, it's accepted that if you're buying a car, a profit is being made by the seller, people know a profit is being made by a car salesman when they sign you up for finance, it's been a running joke for years how dealers don't want to deal with customers who just turn up and buy a car in full with a bank transfer or a debit/credit card, and that's alright.

What isn't alright, and I still don't see how a number on here are actually trying to justify it, that someone can present to a customer a regulated finance product as if its the best possible rate or deal available to that customers circumstances, all the while hiding behind the fact that, not only is it not the best rate that the customer is eligible for, that the supplying agent is personally manipulating those figures to ensure that they make a personal profit off purposefully signing the customer up to a worse product than one they could have had.

Doesn't matter if the customer was happy with what they signed up for, as I said above, I have two I can probably apply for (lets go with the assumption that I am eligible for money back in these two instances), I was happy with what I was paying when I signed up as it was presented to me as the best deal available, oddly I asked on both instances if there were any better numbers when presented with the final figures, and surprisingly no was the answer, well that's a lie, I was told I can ether extend the period of finance, or increase the deposit, no mention that they them could personally (potentially) move the slider on the APR slider on the finance agreement to the left; back down to the lowest possible rate available for my circumstances, but that would result in me being hundreds or thousands better off and their commission going down to whatever base level commission they get for finance signups. I don't know anyone in my life that I'd be happy to sign up for a worse interest rate, just so they could benefit more, to the detriment of me, and the FCA has agreed with that notion. Unsurprisingly had the dealers stated to me that I was paying a higher interest rate so that they could personally get a bigger gift from the finance company I would have said no thanks, and I think a lot if not all people would do the same.

I don't know if it's because I had a decent deposit when I traded in my car in late 2022 for my new car, that I got quoted the best rate I've personally ever seen for car finance in a number of years, or because they've been hammered by the FCA and told to pack it, guess we'll never know.

[Zero Fuchs]

You say happy but a huge amount of PCP is sold to the poorer of society on older cars. These are people that will suffer high APR because they just don't have the finances to buy ever more expensive cars.

For them it's not a case of being happy with the figures but it's just all they can get.

But otherwise agree 100%.

[Dixy]

Its all right you idle lot, Nany state will be along to stop those nasty greedy people.
Don't complain when the law of unforeseen consequences kicks in. Every action has an equal and opposite reaction. At least you will have something else to blame on others.

[PF62]

Dixy said:

Its all right you idle lot, Nany state will be along to stop those nasty greedy people.
Don't complain when the law of unforeseen consequences kicks in. Every action has an equal and opposite reaction. At least you will have something else to blame on others.

Duh... people are not being idle when they are being actively cheated by the dishonest car dealers and the banks - as the FCA have determined they were.

And yes every action has an equal and opposite reaction - the dishonest car dealers and banks who were trying to line their own pockets by cheating the customers now have to refund them WITH interest.

[OddCat]

Forester1965 said:

OddCat said:

^^^^^^^ This. This is becoming a moral hazard issue. People can just do anything (or sign up to anything) safe in the knowledge that at some point it will be put right and someone else will pay.

Nonsense. You could have been as careful as you liked in this instance.

Black Horse could have told the dealership it would offer 3.5%, but for every point they got above that they got an extra £100 or whatever in commission.

The customer walks in, gives his details and the salesman says "Great news! You can get 5%, you must have a great credit score!". It's deceptive. The customer had no way of finding out they qualified for the lower rate.

You are selling a car and you're hoping to get £17,500 for it. You advertise it at £20,000.

Someone comes along and offers you £20,000. Do you say "that's great but I was actually hoping for £17,500. I'm not going to penalise your hopeless negotiating skills so you can have the car for £17,500"

[pork911]

phpe said:

The only view that matters is that of the regulator, the FCA.

jaw dropping

[Forester1965]

OddCat said:

You are selling a car and you're hoping to get £17,500 for it. You advertise it at £20,000.

Someone comes along and offers you £20,000. Do you say "that's great but I was actually hoping for £17,500. I'm not going to penalise your hopeless negotiating skills so you can have the car for £17,500"

That's the wrong way around.

It's more like you want £20k for the car and the buyer rocks up in a Bentley so suddenly you change the sticker price to £25k 'because reasons'.

[FamousPheasant]

KingNothing said:

Funny how the FCA can deem it wrong with examples of how it was manipulated and misrepresented, but there are still carsales bootlickers on here using all sorts of mental gymnastics to try and justify the scummy behaviour of car salesmen as alright, hilarious, ohh no, the saintly car salespeople have had some semblance of morals forced on them by the FCA, the horror, I'm sure they still have enough underhanded tactics in their armoury (or come up with new ones) to ensure they get paid above all else, I doubt many will shed a tear for them.

I know it's fashionable to have a certain image of car sales people, but in the defense of the individuals doing the deals - they were merely using a mechanism available to them.

It's the lenders and senior management of the dealers who should be taking the rap.

Personally, I'm staggered more people don't shop about, research and spend some time - on likely the second biggest purchase they will ever make - to make sure they get the best overall deal. But then I've never taken a PCP deal out either.

[sugerbear]

pork911 said:

phpe said:

The only view that matters is that of the regulator, the FCA.

jaw dropping

Jaw dropping that you are on the side of finance brokers and finance companies that all had access to the detailsof consumer credit act of 1974 and FCA guidence documents since 2007 and yet they still either couldn't understand it. Not all dealers and finance companies played this game, so there were clearly some that knew / ignored / were willfully ignorant of the relevent legislation in place at the time. That is the cost of being in the market and not following the law.

You also appear to be linking the price of the car with the finance agreement, it's solely the finance agreement that is the issue which has nothing to do with the stciker price the buyer paid on the forcourt, dealers still made good money on those cars and the part exchanges. The sticker price of the car doesn't change if you are paying cash, bank transfer or taking finance (generalluy. But it does change for these finance deals becuase they, the broker lumped, on a commission payment that they didn't disclose to the buyer.

If you are worrried about future finance deals becoming unaffordale there are other dealerships / finance firms that wont be impacted by these claims so just buy from one of those. The market at work.

[sugerbear]

FamousPheasant said:

KingNothing said:

Funny how the FCA can deem it wrong with examples of how it was manipulated and misrepresented, but there are still carsales bootlickers on here using all sorts of mental gymnastics to try and justify the scummy behaviour of car salesmen as alright, hilarious, ohh no, the saintly car salespeople have had some semblance of morals forced on them by the FCA, the horror, I'm sure they still have enough underhanded tactics in their armoury (or come up with new ones) to ensure they get paid above all else, I doubt many will shed a tear for them.

I know it's fashionable to have a certain image of car sales people, but in the defense of the individuals doing the deals - they were merely using a mechanism available to them.

It's the lenders and senior management of the dealers who should be taking the rap.

Personally, I'm staggered more people don't shop about, research and spend some time - on likely the second biggest purchase they will ever make - to make sure they get the best overall deal. But then I've never taken a PCP deal out either.

Agreed this will have been the senior management at a major dealership that thought up the practice, then a compliant finance company will have played along, then the practice will have spread.

[Forester1965]

sugerbear said:

Agreed this will have been the senior management at a major dealership that thought up the practice, then a compliant finance company will have played along, then the practice will have spread.

It's some big finance companies who've allowed it (Close Brothers, Black Horse as was etc.). It will have had to go through layers of compliance as a practice before being signed off. It's not the kind of environment where Jeff, this week's used car sales manager, has a bright idea one Friday.

[KingNothing]

FamousPheasant said:

KingNothing said:

Funny how the FCA can deem it wrong with examples of how it was manipulated and misrepresented, but there are still carsales bootlickers on here using all sorts of mental gymnastics to try and justify the scummy behaviour of car salesmen as alright, hilarious, ohh no, the saintly car salespeople have had some semblance of morals forced on them by the FCA, the horror, I'm sure they still have enough underhanded tactics in their armoury (or come up with new ones) to ensure they get paid above all else, I doubt many will shed a tear for them.

I know it's fashionable to have a certain image of car sales people, but in the defense of the individuals doing the deals - they were merely using a mechanism available to them.

It's the lenders and senior management of the dealers who should be taking the rap.

Personally, I'm staggered more people don't shop about, research and spend some time - on likely the second biggest purchase they will ever make - to make sure they get the best overall deal. But then I've never taken a PCP deal out either.

I've no doubt this was filtered down from the lenders themselves, and/or senior management at dealers as a further incentive to sell vehicles and sell finance arrangements, so I can understand why you're advocating for salesmen to a degree, but ultimately it was those salesmen taking money directly out of the pockets of customers to line their own; that is the whole scenario in its purest and simplest boiled down form, people can come and do whataboutery and whatif's, but long story short, the salesmen had the chance not to screw over people by simply giving them the deals they were eligible to at the personal cost of getting a better commission payment and as it's been found out, some (not all) have taken the opportunity to make more money and grabbed it with both hands.

But we've heard it multiple times before, when something gets found out though, haven't we? "I was only following orders" Same playbook as PPI; that'll only get you so far off the hook, but ultimately it still doesn't excuse the behaviour which maybe at the time wasn't illegal or perceived to be (maybe it was, I don't know), but was scummy and underhanded at a minimum, a minimum. And retrospectively has been found to be illegal, and I can understand the perception of something is legal until it isn't.

Ultimately it is the lenders taking the rap for this, they're the ones who have to pay out the compensation (some will argue it's everyone who's going to pay for it with higher prices etc. to compensate profit margins, maybe, probably, definitely), probably not fall to the senior management of the dealerships that participated in the practice though, and definitely not the salesmen who struck the deals, the salesmen will have rode off into the sunset relatively Scott free in retrospect, with the only recourse being that they thankfully haven't been able to continue this ruse for the past couple of years already. They've had their customers money and ran, so again you'll not have many people feeling for the hard done salesmen.

[Dixy]

sugerbear said:

Jaw dropping that you are on the side of finance brokers and finance companies that all had access to the detailsof consumer credit act of 1974 and FCA guidence documents since 2007 and yet they still either couldn't understand it. Not all dealers and finance companies played this game, so there were clearly some that knew / ignored / were willfully ignorant of the relevent legislation in place at the time. That is the cost of being in the market and not following the law.

You also appear to be linking the price of the car with the finance agreement, it's solely the finance agreement that is the issue which has nothing to do with the stciker price the buyer paid on the forcourt, dealers still made good money on those cars and the part exchanges. The sticker price of the car doesn't change if you are paying cash, bank transfer or taking finance (generalluy. But it does change for these finance deals becuase they, the broker lumped, on a commission payment that they didn't disclose to the buyer.

If you are worrried about future finance deals becoming unaffordale there are other dealerships / finance firms that wont be impacted by these claims so just buy from one of those. The market at work.

Equally jaw dropping
Is it nice in this la la land you live in, wake up and smell the coffee.

[79.3x86.4]

So customers were given an initial disclosure document stating that the broker would/may/could (not all finance packaged offered a rate mechanism like described here or even a commission payment hence may/could) be paid commission by the finance company.

Customer simply had to read this and ask how much commission they were getting and the broker had to disclose the amount.

Doesn’t seem overly hidden ?

Edited by 79.3x86.4 on Friday 9th February 11:35