Secret Commission Claims in the Automotive Sector – the Issues

Automotive retailers are facing aggressively pursued claims by thousands of consumers for alleged hidden commission fees paid by lender finance companies, and the issue is set to trouble the sector for a good while yet.

So, what are the key issues?


• The word “may”.

A major focus of the claims is on the use of the word “may”. Claimants, encouraged by lawyers on no-win no-fee arrangements, are alleging that only informing a consumer that a commission “may” as opposed to “will” be paid does not comply with CONC 4.5.3, which requires a credit broker/intermediary, to inform a consumer about the existence of commission.


• Agency

Claimant lawyers are alleging that retailers are unlimited agents of finance companies and are unfairly telling consumers that their finance products are the best finance deals they can get.


• Loss

In essence, Claimants are alleging that had they been correctly advised, they could and thus would have obtained better interest rates elsewhere.

I have received a claim – what next?

We are specialists, having represented retailers in the automotive sector for 25 years.
These “child of PPI” claims are yet to be tested authoritatively in the higher courts but we consider that the answer lies largely in the existing law.

Where consumers are told something may happen, and it does, there can be no secret. Where a retailer is acting as an agent of a finance company, its agency must logically be confined to negotiations about the goods themselves and not extend into the realms of negotiating terms of a finance agreement and interest rate.

But in any event, whilst interest rates are but one of a whole panoply of factors a Court has to consider, our long experience is that retailers never hold themselves out to be whole-market finance product advisers. They are but merely brokers of captive finance providers offering the best rates by those providers for the particular consumers of particular vehicles according to their own individual particular circumstances.

As long as the retailer complies with its obligations under CONC, and the customer is made aware of the terms of the finance deal, interest rate, monthly instalments, charge for credit and other relevant factors, we consider that the retailer’s obligations have been discharged and no loss has realistically been suffered.

We think this growing problem of claims now landing on retailers in letters from a selection of law firms can be defended.

If you have received a formally issued Court claim or only a pre-action Letter of Claim, or simply wish to discuss the issues further, then please do get in touch.

We can offer you specialist advice and our expert automotive lawyers are happy to assist and are on hand to help you and your business.

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