Car finance - hidden commission payments

[Caddyshack]

djc206 said:

OddCat said:

Imagine if new technology was invented that could automatically, retrospectively, ticket you for exceeding the speed limit every single time you had done it in the last 15 years. You were breaking 'the law ' after all. Better still, we should all fess up to each of those occasions and take our punishment.

We'll need to rename this site "pedalheads" as not one of us will have a licence for the next 10 years. But you'd be fine with that.

There was no victim in that example so no it’s not in any way comparable but nice try.

If we are to believe the reasons for some lowered speed limits then there is a victim with all the poor people breathing our added pollution and increasing the statistical average speed of that road which leads to x out of Y people being hurt etc.

[OddCat]

djc206 said:

OddCat said:

Imagine if new technology was invented that could automatically, retrospectively, ticket you for exceeding the speed limit every single time you had done it in the last 15 years. You were breaking 'the law ' after all. Better still, we should all fess up to each of those occasions and take our punishment.

We'll need to rename this site "pedalheads" as not one of us will have a licence for the next 10 years. But you'd be fine with that.

There was no victim in that example so no it’s not in any way comparable but nice try.

A few years back, on a sunny Sunday morning I was caught by a mobile speed camera doing 36 in a 30 on a wide open dry country road with no other traffic or people around.

Given that there wasn't a 'victim' can I now ask for the fine money back and for the points to be expunged from the record ?

[sugerbear]

OddCat said:

A few years back, on a sunny Sunday morning I was caught by a mobile speed camera doing 36 in a 30 on a wide open dry country road with no other traffic or people around.

Given that there wasn't a 'victim' can I now ask for the fine money back and for the points to be expunged from the record ?

Wrong thread, you need the legal/law thread where people can ridicule you for being so dim.

[OddCat]

sugerbear said:

OddCat said:

A few years back, on a sunny Sunday morning I was caught by a mobile speed camera doing 36 in a 30 on a wide open dry country road with no other traffic or people around.

Given that there wasn't a 'victim' can I now ask for the fine money back and for the points to be expunged from the record ?

Wrong thread, you need the legal/law thread where people can ridicule you for being so dim.

Congratulations on catastrophically missing the point. Well done !

[P-Jay]

OddCat said:

PF62 said:

OddCat said:

PF62 said:

Hence the rules requiring the broker to disclose to their client any such commission arrangements that affect that impartiality and which may have affected the clients willingness to proceed - And they didn't do that.

.....and yet, for 15 years, nobody noticed this wasn't happening. Nobody at the FCA checked that their 'rules' were being applied correctly. Nobody doing internal or external audits into the arrangements noticed. No whistleblowers from dealers or brokers were shouting from the rooftops. Not a dicky bird.

Pull the other one !

So you have now run out of any real argument that the dealers as brokers were not breaking the rules, and are now trying a 'they did it for years, so it must have been fine' line.

Hmmm...

Well, luckily it doesn't matter two hoots what you or I think.

I'm hoping the banks resist and put up a proper fight this time rather than rolling over and paying out to every Tom, Dick and Harry like they did with PPI. In those cases, they even paid out when people had actually successfully claimed for death, sickness or unemployment on their PPI policy that was 'not appropriate' for them

This type of retrospective, stale, application of rules where 'interpretation' played part and where it was quite clear what was happening is dangerous and make the UK uninvestable. These things should be 'time barred' as a minimum.

What next ? Gazza being pursued for a poor tackle he did in 1995 ?

I worked for RBS and it's subsidiary Lombard for 10 years in the 2000s and I sold a lot of PPI type products, some were decent. GAP and RTI were valuable and easy to understand, but we knew PPI was worthless, 90% of consumers would be worse off claiming on PPI than simply relying on normal banking rules and practices for support in the case of a 'major lifestyle change'. We sold it because it was very profitable for us and the Bank and frankly because if you didn't hit targets on it you would lose your job. That was the super prime / HNWI market. Once you got into retail and sub-prime lending PPI 'sales' were a lot more wild-west. They'd simply add it to loans hoping the customer wouldn't spot it,or tell them it was an underwriting requirement both practices are very bad compliance wise.

That said, rumour was that the PPI refund thing was a much about banks paying a penance to the BOE for the bailout and boosting the economy at the same time, because the idea was that the kind of consumer who would be buy PPI, was the same type of consumer who'd spend a windfall on a Holiday, new car, kitchen etc and it was true.

As for the hidden commission payments thing, if the FCA give a ruling like PPI that "by the balance of probability any product of this type was mis sold" they really mean it. I don't understand the bitterness of people being compensated for dodgy practices, even if they don't consider they have been 'mis sold'.

[Caddyshack]

P-Jay said:

OddCat said:

PF62 said:

OddCat said:

PF62 said:

Hence the rules requiring the broker to disclose to their client any such commission arrangements that affect that impartiality and which may have affected the clients willingness to proceed - And they didn't do that.

.....and yet, for 15 years, nobody noticed this wasn't happening. Nobody at the FCA checked that their 'rules' were being applied correctly. Nobody doing internal or external audits into the arrangements noticed. No whistleblowers from dealers or brokers were shouting from the rooftops. Not a dicky bird.

Pull the other one !

So you have now run out of any real argument that the dealers as brokers were not breaking the rules, and are now trying a 'they did it for years, so it must have been fine' line.

Hmmm...

Well, luckily it doesn't matter two hoots what you or I think.

I'm hoping the banks resist and put up a proper fight this time rather than rolling over and paying out to every Tom, Dick and Harry like they did with PPI. In those cases, they even paid out when people had actually successfully claimed for death, sickness or unemployment on their PPI policy that was 'not appropriate' for them

This type of retrospective, stale, application of rules where 'interpretation' played part and where it was quite clear what was happening is dangerous and make the UK uninvestable. These things should be 'time barred' as a minimum.

What next ? Gazza being pursued for a poor tackle he did in 1995 ?

I worked for RBS and it's subsidiary Lombard for 10 years in the 2000s and I sold a lot of PPI type products, some were decent. GAP and RTI were valuable and easy to understand, but we knew PPI was worthless, 90% of consumers would be worse off claiming on PPI than simply relying on normal banking rules and practices for support in the case of a 'major lifestyle change'. We sold it because it was very profitable for us and the Bank and frankly because if you didn't hit targets on it you would lose your job. That was the super prime / HNWI market. Once you got into retail and sub-prime lending PPI 'sales' were a lot more wild-west. They'd simply add it to loans hoping the customer wouldn't spot it,or tell them it was an underwriting requirement both practices are very bad compliance wise.

That said, rumour was that the PPI refund thing was a much about banks paying a penance to the BOE for the bailout and boosting the economy at the same time, because the idea was that the kind of consumer who would be buy PPI, was the same type of consumer who'd spend a windfall on a Holiday, new car, kitchen etc and it was true.

As for the hidden commission payments thing, if the FCA give a ruling like PPI that "by the balance of probability any product of this type was mis sold" they really mean it. I don't understand the bitterness of people being compensated for dodgy practices, even if they don't consider they have been 'mis sold'.

I don’t think it is bitterness. I think it is feeling sorry for the people who may well lose a lot of the commission is clawed back - it isn’t clear who will pay the punter yet. It’s also the band wagon that forms, everyone will complain and get a bung even if they were not mis-sold or were perfectly happy with the rate they paid.

[PF62]

Caddyshack said:

or were perfectly happy with the rate they paid.

The issue isn’t whether they were happy with the rate paid, but whether the rate was higher than it should have been.

If you had asked them at them time if they were happy paying 5.5% when they should have been paying 2.49% then I doubt you would get an affirmative answer.

[Caddyshack]

PF62 said:

Caddyshack said:

or were perfectly happy with the rate they paid.

The issue isn’t whether they were happy with the rate paid, but whether the rate was higher than it should have been.

If you had asked them at them time if they were happy paying 5.5% when they should have been paying 2.49% then I doubt you would get an affirmative answer.

Yes, I know the issue and what was wrong.

The customer is not totally naïve though and would have been issued with documents and had every opportunity to shop around.

Oversimplifying in favour of the customer is a little unfair Imo. The sales person was not willing to do a deal that low, it has to be win win. Just because Sainsbury are selling beans at 20p a tin doesn’t mean Tesco has to tell the customer they should put the same beans back at 30p a tin and buy at Sainsbury.

[PF62]

Caddyshack said:

The customer is not totally naïve though and would have been issued with documents and had every opportunity to shop around.

They shouldn’t have needed to shop around as they were using a broker who was required to be impartial when presenting the deals.

Caddyshack said:

Oversimplifying in favour of the customer is a little unfair Imo. The sales person was not willing to do a deal that low, it has to be win win.

Once the dealer had sold the car then they were no longer a salesperson when dealing with the finance, they were a broker and as a broker you are not “selling” anything.

Correcting a misuse of language may seem pedantic but goes to the heart of why the dealers got this wrong.

[Caddyshack]

PF62 said:

Caddyshack said:

The customer is not totally naïve though and would have been issued with documents and had every opportunity to shop around.

They shouldn’t have needed to shop around as they were using a broker who was required to be impartial when presenting the deals.

Caddyshack said:

Oversimplifying in favour of the customer is a little unfair Imo. The sales person was not willing to do a deal that low, it has to be win win.

Once the dealer had sold the car then they were no longer a salesperson when dealing with the finance, they were a broker and as a broker you are not “selling” anything.

Correcting a misuse of language may seem pedantic but goes to the heart of why the dealers got this wrong.

The salesperson was not acting as an independent broker though. The term credit broker just means they are not the lender in this instance and as such I do not believe the customer ever expected them to be impartial. It is also wrong for anyone to assume that a car dealer ever stops being the salesperson, I believe that would be naïve too….this obviously is the technicality that the complaint hangs on but I do not believe that is in the true spirit.

I know that the rules were broken, hence the payouts, I just think it is all a bit contrived to claim that they didn’t know that the commission affected the rate they ended up paying.

Edited by Caddyshack on Wednesday 21st February 21:40

[PF62]

Caddyshack said:

The salesperson was not acting as an independent broker though. The term credit broker just means they are not the lender in this instance and as such I do not believe the customer ever expected them to be impartial. It is also wrong for anyone to assume that a car dealer ever stops being the salesperson, I believe that would be naïve too….this may be the technicality that the complaint hangs on but I do not believe that is in the true spirit.

So the 'spirit' was that the customer should have known that the dealer as credit broker didn't understand that they were a credit broker, or alternatively just ignored that awkward issue.

And therefore the customer should have expected to be ripped off because they should have known the dealer as credit broker wasn't applying the rules.

Hmm... you think that makes things better?

[Caddyshack]

PF62 said:

Caddyshack said:

The salesperson was not acting as an independent broker though. The term credit broker just means they are not the lender in this instance and as such I do not believe the customer ever expected them to be impartial. It is also wrong for anyone to assume that a car dealer ever stops being the salesperson, I believe that would be naïve too….this may be the technicality that the complaint hangs on but I do not believe that is in the true spirit.

So the 'spirit' was that the customer should have known that the dealer as credit broker didn't understand that they were a credit broker, or alternatively just ignored that awkward issue.

And therefore the customer should have expected to be ripped off because they should have known the dealer as credit broker wasn't applying the rules.

Hmm... you think that makes things better?

Silly argument now, that isn’t what I was saying. They didn’t expect to be ripped off, nor did they believe the sales guy wasn’t getting paid at all, did they think some magic happens where they pay the same rate with every single lender and the sales guy just got some commission?

No point going around in circles anymore. It isn’t as black and white as you make out that is my opinion.

[PF62]

Caddyshack said:

Silly argument now, that isn’t what I was saying. They didn’t expect to be ripped off, nor did they believe the sales guy wasn’t getting paid at all, did they think some magic happens where they pay the same rate with every single lender and the sales guy just got some commission?

No point going around in circles anymore. It isn’t as black and white as you make out that is my opinion.

Yes it is black and white.

No matter how you try to twist it, the fact was that in arranging the finance the dealer *was* a credit broker and they were bound by those rules like or not - and frankly if they didn't like it then they shouldn't have got involved in finance and just sold cars.

And of course the customer expected to pay some commission, but what they didn't expect was for the dealer to ignore the credit broker rules that they were required to apply and to push up the interest rate to the detriment of the customer simply to line their own pockets.

[PlywoodPascal]

precisely - irresponsible or ignorant people acting improperly because they did not understand or did not care what their responsibilities were and for whom they were supposed to execute them.

[PlywoodPascal]

Caddyshack said:

The salesperson was not acting as an independent broker though.

which is the problem

said:

The term credit broker just means they are not the lender in this instance and as such I do not believe the customer ever expected them to be impartial.

the term credit broker means someone who works in the customer's best interest, i.e. finds the best deal for the customer. As such it is reasonable for customers to expect them to act impartially.

said:

It is also wrong for anyone to assume that a car dealer ever stops being the salesperson, I believe that would be naïve too….this obviously is the technicality that the complaint hangs on but I do not believe that is in the true spirit.

They stop being a salesperson when the price of the car is agreed and they start acting as a credit broker.

said:

I know that the rules were broken, hence the payouts, I just think it is all a bit contrived to claim that they didn’t know that the commission affected the rate they ended up paying.

unsure how it can be contrived to claim customers did not know, when customers were not told that discretionary commission was paid.

[OddCat]

They are intermediaries not brokers.

Brokers shop around for the best deal for you. An intermediary, on the other hand, acts as a link between people in order to try and bring about an agreement. Effectively a mediator. Acting for BOTH parties (the borrower and the lender).

Intermediaries are not an agent for the lender. They are authorised in their own right although I'm not sure how the FCA thought they were being paid.

[Forester1965]

In the financial advice world, the solution was to ban advisers from receiving commission for investment products. You could do similar in the car finance world, though it'd likely mean the cost of cars would rise to replace the margin and it might not result in cheaper finance deals.

New cars sales is also a changing environment as it migrates to the agency model.

[sugerbear]

OddCat said:

A few years back, on a sunny Sunday morning I was caught by a mobile speed camera doing 36 in a 30 on a wide open dry country road with no other traffic or people around.

Given that there wasn't a 'victim' can I now ask for the fine money back and for the points to be expunged from the record ?

Wrong thread, you need the legal/law thread where people can ridicule you for being so dim.

[Stupot123]

OddCat said:

They are intermediaries not brokers.

Brokers shop around for the best deal for you. An intermediary, on the other hand, acts as a link between people in order to try and bring about an agreement. Effectively a mediator. Acting for BOTH parties (the borrower and the lender).

Intermediaries are not an agent for the lender. They are authorised in their own right although I'm not sure how the FCA thought they were being paid.

There are a few “experts” policing this thread being very adamant about something that’s not been decided yet. And please “experts”, no multi quoting me, I’m always slightly in awe or maybe it’s frightened by some internet warriors ability to multi quote.

To me, and I am no expert and very curious about the whole situation, it looks like they are spouting financial services regulations from other sectors and trying to apply it to the motor trade. I’m reading about all this rule breaking, but no detail of what rules applied, when they applied and how they were broken.

At no point was/is there any onus on the dealer to do all their deals at base rate. I’ve mentioned before, the dealer was actually targeted by the lender on rate spread, ie the upsale rate and to this very day, they add their margin and sell out at the APR that suits them, not the customer. So if the credit broker rules being thrown about require that, then the dealer wasn’t/ isn’t a credit broker. Your explanation of them being an intermediary sounds more like it. It even states on their websites who their main lender partner is and that’s a commercial arrangement to suit the dealer, not the customer.

There is a lot of hatred towards car dealers here, and I’m not sure it’s merited. Interestingly the two FOS cases don’t even mention the dealer, the refunds were the lenders responsibility and Martin Lewis’s complaint template is for the lenders. As far as I can see, as an industry they didn’t disclose commission when it wasn’t a requirement, and they now do when it was, not sure that indicates any rule breaking.

Interestingly I’m led to believe that the two FOS cases were very much not normal/typical cases and much more complex than being portrayed. Talk of max advances, rates then being moved up to increase commission to then be used to increase the p/x. If that’s genuinely the case, the dealer was trying to help the customer out of a hole, into a new car.

[PF62]

OddCat said:

They are intermediaries not brokers.

Brokers shop around for the best deal for you. An intermediary, on the other hand, acts as a link between people in order to try and bring about an agreement. Effectively a mediator. Acting for BOTH parties (the borrower and the lender).

Intermediaries are not an agent for the lender. They are authorised in their own right although I'm not sure how the FCA thought they were being paid.

Now you are either just being ignorant or are simply trying to avoid confronting the facts a the rule they broke was CONC 4.5.3 that applies to *credit brokers* -

www.handbook.fca.org.uk/handbook/CONC/4/5.html?dat...