So it looks like the whole car finance saga might be coming to a conclusion. The Supreme Court has now handed down its decisions and they overturn some earlier lower court decisions. All clear as mud?
Now, I can’t give legal advice and I’m not a lawyer, but I can make some practical suggestions.
Discretionary Commission Arrangements (DCAs)
If you had car finance between 2007 and 2021 you may have unknowingly paid an interest rate higher than that specified by the finance house because the dealer had an arrangement with the finance house to receive a commission on introducing you as the customer to the finance house.
Some of these commissions were ‘reasonable‘ in the view of courts, others ‘unfair‘.
The courts made the interest rate adjusting practise unlawful in 2021, unless it was specifically made very clear to the customer that a commission was being added.
The Supreme Court has taken the view that an arrangement between the finance house and the dealer was a commercial relationship and the customer did not need to be informed how the rate was achieved. However, in a 3rd case it opined that a commission of 30 or more percent was ‘unfair’.
Now that the court has made its decision, the Financial Conduct Authority, an independent body, has said it will, within a few weeks, consult with the finance houses and consumer groups and will decide upon a compensation scheme for everyone affected.
This scheme will be free to use and any payment will be free of any deductions.
We’ve all seen the wild ads by claims companies suggesting up to £10,000 may be paid out BUT these were always ridiculously inflated promises.
It is likely that maximum payouts will be a few hundred pounds.
We strongly advise you NOT to sign up with one of the claims companies.
If you have already done so they may be able to claim up to 37.5% of any money you receive even if they do no work for it.
So, while we’re discussing ethical dealings you may want to think on how fair such ads are.
Best advice now is gather any paperwork you have and wait for the FCA to announce the scheme, probably in October.
Useful Link:
Financial Conduct Authority (FCA) – https://www.fca.org.uk/consumers/car-finance-complaints
Image by Stefan Schweihofer from Pixabay
