Car finance - hidden commission payments
Discussion
Interesting segment on Martin Lewis Money Show tonight about car finance arrangements between April 2007 and Jan 2021
https://www.moneysavingexpert.com/reclaim/reclaim-...
Background - in 2021, the Financial Conduct Authority banned the common practice of "Discretionary Commission Arrangements" where the credit broker(typically the selling garage) manipulated the interest rates offered to car buyers in return for hidden commission payments paid by the finance providers to the credit broker
In early 2024, the FCA announced further investigations which may lead to potentially big implications for the affected lenders.
https://www.fca.org.uk/news/press-releases/fca-ban...
https://www.fca.org.uk/news/statements/fca-underta...
Martin, in his inimitable style, has put together an easy to use tool in the link above to help people find out if the agreement(s) they have had with various finance companies/lenders are of the type that may have contained hidden commission payments, and to help people log claims ahead of any potential FCA deadlines in the future.
Clearly, all PH'ers are company directors of the powerfully built variety and would never have sullied themselves with something as tawdry as a finance agreement, but on the off chance you did have an unusually expensive agreement....perhaps worth investigating.
https://www.moneysavingexpert.com/reclaim/reclaim-...
Background - in 2021, the Financial Conduct Authority banned the common practice of "Discretionary Commission Arrangements" where the credit broker(typically the selling garage) manipulated the interest rates offered to car buyers in return for hidden commission payments paid by the finance providers to the credit broker
In early 2024, the FCA announced further investigations which may lead to potentially big implications for the affected lenders.
https://www.fca.org.uk/news/press-releases/fca-ban...
https://www.fca.org.uk/news/statements/fca-underta...
Martin, in his inimitable style, has put together an easy to use tool in the link above to help people find out if the agreement(s) they have had with various finance companies/lenders are of the type that may have contained hidden commission payments, and to help people log claims ahead of any potential FCA deadlines in the future.
Clearly, all PH'ers are company directors of the powerfully built variety and would never have sullied themselves with something as tawdry as a finance agreement, but on the off chance you did have an unusually expensive agreement....perhaps worth investigating.
My gut feel is that this will mainly affect used car finance agreements, which are typically higher rates than new car rates
New car deals tend to be standardised deals/discounts/finance contributions offered to all eligible applicants if they met underwriting criteria
Used car rates were often at the discretion/influence of the credit broker/selling garage to set themselves in return for extra commission levels/tiers, which is where the conflict of interest arose.
New car deals tend to be standardised deals/discounts/finance contributions offered to all eligible applicants if they met underwriting criteria
Used car rates were often at the discretion/influence of the credit broker/selling garage to set themselves in return for extra commission levels/tiers, which is where the conflict of interest arose.
I distinctly remember seeing the sales managers screen when they could just change the interest rate on a deal. usually when the customer had said their budget was say £200 per month (up to)...little sales bulls
t in brackets there. and if the deal cme in at 180 they just added more interest to get a bigger kickback from the finance company.
if their budget was £200...up to....
and it came in at £220 etc they upped the term from 4 years to 5..
t in brackets there. and if the deal cme in at 180 they just added more interest to get a bigger kickback from the finance company. if their budget was £200...up to....
and it came in at £220 etc they upped the term from 4 years to 5..
I hate throwing paperwork away so I actually still have the advert and paperwork from when I bought my car in 2011, reading it now I can’t believe I signed up to it, all I saw was a shiny car and didn’t think about it properly, I shall definitely be putting in a claim and will see what happens,
alscar said:
Will certainly be interesting to see whether the likes of VWFS and Alphera are impacted by this.
ML suggested this could be the second biggest “ scandal “ after PPI.
They (VW) are, the tool allows you to put the finance company name in, for example Peugeot doesn't appear, but Volkswagen does. ML suggested this could be the second biggest “ scandal “ after PPI.
They blurb on the MSE website says 40 % of deals are likely to be affected by this if you had a deal between 2007 and before 2021 there is a chance you are affected.
BMW, Ford, Volvo, VW, Vauxhall, Toyota, Mercedes, Hyundai and Honda are all on there along with some others. (Nothing for Peugeot/Citreon/PSA)
https://www.moneysavingexpert.com/reclaim/reclaim-...
sugerbear said:
alscar said:
Will certainly be interesting to see whether the likes of VWFS and Alphera are impacted by this.
ML suggested this could be the second biggest “ scandal “ after PPI.
They (VW) are, the tool allows you to put the finance company name in, for example Peugeot doesn't appear, but Volkswagen does. ML suggested this could be the second biggest “ scandal “ after PPI.
They blurb on the MSE website says 40 % of deals are likely to be affected by this if you had a deal between 2007 and before 2021 there is a chance you are affected.
BMW, Ford, Volvo, VW, Vauxhall, Toyota, Mercedes, Hyundai and Honda are all on there along with some others. (Nothing for Peugeot/Citreon/PSA)
https://www.moneysavingexpert.com/reclaim/reclaim-...
Worth having a read of the decisions that the FCA have already made
https://www.financial-ombudsman.org.uk/decision/DR...
https://www.financial-ombudsman.org.uk/decision/DR...
It wont just be the overpayment of interest, it will also be the additional 8% per annum interest they have to pay on top that will bump up the payments (though I believe that interest payment will be subject to income tax if it is more than £1000 for a basic rate taxpayer / £500 for a higher rate taxpayer / £0 if you are an additional rate taxpayer).
https://www.financial-ombudsman.org.uk/decision/DR...
https://www.financial-ombudsman.org.uk/decision/DR...
It wont just be the overpayment of interest, it will also be the additional 8% per annum interest they have to pay on top that will bump up the payments (though I believe that interest payment will be subject to income tax if it is more than £1000 for a basic rate taxpayer / £500 for a higher rate taxpayer / £0 if you are an additional rate taxpayer).
HTP99 said:
sugerbear said:
alscar said:
Will certainly be interesting to see whether the likes of VWFS and Alphera are impacted by this.
ML suggested this could be the second biggest “ scandal “ after PPI.
They (VW) are, the tool allows you to put the finance company name in, for example Peugeot doesn't appear, but Volkswagen does. ML suggested this could be the second biggest “ scandal “ after PPI.
They blurb on the MSE website says 40 % of deals are likely to be affected by this if you had a deal between 2007 and before 2021 there is a chance you are affected.
BMW, Ford, Volvo, VW, Vauxhall, Toyota, Mercedes, Hyundai and Honda are all on there along with some others. (Nothing for Peugeot/Citreon/PSA)
https://www.moneysavingexpert.com/reclaim/reclaim-...
sugerbear said:
They (VW) are, the tool allows you to put the finance company name in, for example Peugeot doesn't appear, but Volkswagen does.
They blurb on the MSE website says 40 % of deals are likely to be affected by this if you had a deal between 2007 and before 2021 there is a chance you are affected.
BMW, Ford, Volvo, VW, Vauxhall, Toyota, Mercedes, Hyundai and Honda are all on there along with some others. (Nothing for Peugeot/Citreon/PSA)
https://www.moneysavingexpert.com/reclaim/reclaim-...
Thanks -I should have read the article first as now see Alphera is mentioned straight away !They blurb on the MSE website says 40 % of deals are likely to be affected by this if you had a deal between 2007 and before 2021 there is a chance you are affected.
BMW, Ford, Volvo, VW, Vauxhall, Toyota, Mercedes, Hyundai and Honda are all on there along with some others. (Nothing for Peugeot/Citreon/PSA)
https://www.moneysavingexpert.com/reclaim/reclaim-...
Around 2018 I financed a 4 series from a BMW main dealer. It was a pre-reg with a huge discount but on their typical 10.9% APR.
Feigning interest and playing on their desperation, I negotiated their used rate from 10.9% to 2.0%. Till then I had no idea that some dealership rates were negotiable.
It's awful really that a customer could pay 10.9% when 2.0% was available and can imagine this is the sort of thing this is uncovering.
Feigning interest and playing on their desperation, I negotiated their used rate from 10.9% to 2.0%. Till then I had no idea that some dealership rates were negotiable.
It's awful really that a customer could pay 10.9% when 2.0% was available and can imagine this is the sort of thing this is uncovering.
sugerbear said:
Thanks. Two more claims going in then :-) Trying to find details of when I purchased them is going to be fun as it was back in 2010!
Do a subject access request to the finance companies for historical records about you.https://ico.org.uk/for-the-public/your-right-to-ge...
Yet again people who could not be arsed to read the contract or negotiate properly are screaming "its not fair".
Hold the front page, car dealers tried to be profitable and made up on the swings what they missed out on the slide.
This money has not been sat in a suspense account for the last 20 years. It will have to come out of future profits. All of us that were prudent in the past will in future be subsidising those that were not.
Hold the front page, car dealers tried to be profitable and made up on the swings what they missed out on the slide.
This money has not been sat in a suspense account for the last 20 years. It will have to come out of future profits. All of us that were prudent in the past will in future be subsidising those that were not.
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