Secret Commissions?

Mistermint

Hi Magiciansgirl: What you need to do is send them an LBA (Letter before Action) Failure to comply with your SAR. Give them 14 days to reply after that you will have to file in the County Court. Ask them for the name of their Data Controller, tell them you will request the Court to have him/her to appear in order to explain why they have failed to supply the information.

LittleJess

Forgive me if I am asking in the wrong place but does the 'secret commissions ' factor also apply where car dealers arrange finance with lenders . I dont mean Hire Purchase .I mean a loan to pay for the vehicle

petermb_2

magiciansgirl wrote: »

Well if it's all gone a bit quiet hope you don't mind if I ask a couple of questions?

I sent an SAR last September to the broker who sold me my sub-prime loan. Recorded delivery and tracked and they received it. No reply within 40 day timeframe ... so wrote again; they replied in February saying they had not received first letter (a lie) but do try again....

Sent copy on 18th February, recorded again and I know it was signed for on 5th March. Still no answer but they haven't cashed the £10 cheque. The 40 days' run out on 14th April, if they still haven't replied do I go to the FSA or the FOS to make a non-compliance complaint?

My advice is dont go after the broker. Go after the lender. They have deeper pockets and are equally responsible.

petermb_2

LittleJess wrote: »

Forgive me if I am asking in the wrong place but does the 'secret commissions ' factor also apply where car dealers arrange finance with lenders . I dont mean Hire Purchase .I mean a loan to pay for the vehicle

Absolutely. Hands up who thinks they arrange the finance for nothing?

petermb_2

BlueAngelCV wrote: »

In a very similar situation where the "ambulance chaser" set the Client up with insurance they have to disclose any agreenent they have with the Insurer, be it referals or a referal fee. If they do not then the agreement is unenforceable and they will not get paid.

The reason for this is that (as someone indicated earlier in the thread) they may not be getting the best deal for the Client if they are thinking about being paid.

I don't know the rules for this situation but would be interested to find out. It seems to me that brokers should be impartial otherwise there is very little point in them.

Where Claims companies have secured a commission for the ATE they are on dicely ground and the lenders will challenge.

LittleJess

petermb wrote: »

Absolutely. Hands up who thinks they arrange the finance for nothing?

Thank you for the reply

Then my next question is .. Should the borrower of a car finance loan be told a commission will be paid and how much it is ?
And should they be told if the dealer is ' tied ' to that finance provider ?

petermb_2

adtheblue wrote: »

I may have got the terminology wrong but I'm sure that if the total amount of fees payable is not verbally disclosed at the point of sale (ie prior to the consideration period).

Does this not make the agreement invalid and if not what would be your right of redress?

There are two issues here. unenforceable ( Loan agreement itself does not stand up to the law that governs it. In this case, the Consumer Credit Act)

Voidable is where there has been a breach of contract. Where the broker has not disclosed the client is entitled to the amount of commission paid plus interest. Where there was no mention of a commission anywhere in documentation it is deemed to be a "secret" commission. Such a situation would deem the loan voidable.

Voidable means you borrowed £10K, you owe £10k. As the agreement is voidable all payments made on that account now become capital repayments. So you work out how much you have paid and deduct it from the original capital. You also deduct the commission plus interest. What is left is what you owe. Or in some cases what they owe you.

~Brock~

petermb wrote: »

Absolutely. Hands up who thinks they arrange the finance for nothing?

Peter - can you kindly explain how on earth a motor dealer can have a fidicuary relationship with one of his customers (i.e. act in best interests and not to profit)? You risk shattering this country's favourite illusion surrounding car dealers!

Just because their CCL says 'credit broker' does not mean they have the same relationship with the client as in the Hurstanger case. At what point in the car buying process does one hand over a fee for the dealer to become the broker and create the relationship with the customer that creates the fidicuary liability. Is there also the requirement to disclose the 'secret profit' made on the car as well?

petermb_2

~Brock~ wrote: »

Peter - can you kindly explain how on earth a motor dealer can have a fidicuary relationship with one of his customers (i.e. act in best interests and not to profit)? You risk shattering this country's favourite illusion surrounding car dealers!

Just because their CCL says 'credit broker' does not mean they have the same relationship with the client as in the Hurstanger case. At what point in the car buying process does one hand over a fee for the dealer to become the broker and create the relationship with the customer that creates the fidicuary liability. Is there also the requirement to disclose the 'secret profit' made on the car as well?

Brock, fiduciary duty has nothing to do with whether the client was charged a fee or not. Hurstanger v Wilson crystalised the issue of fees being charged but the entire case did not rest on the fact that there was a fee. It just firmed up the arrangement.

The law of agency is clear in that if an individual agrees to provide intermediary services they, in law, are chosing to agree to become the borrower's agent, Hence Agency Law.

The dealer offered the service of acting as an intermediary to finance the transaction. This is beyond the selling of a motor car or whatever vehicle is in question.

There is no secret profit on the car. You buy the car at the price you can negotiate. However when the dealer then says can I arrange finance for you ? they are off into another industry and a whole new ball game.

Please explain why arranging car finance should be any different to arranging a secured loan or arranging furniture finance or arranging finance for double glazing. Each has to hold a Consumer Credit Licence to act as a credit broker.

This is why it is called "Common Law" Common to all .

It is simply that many did not recognise what they were doing and did not realise they were acting as a broker or indeed an agent.

petermb_2

~Brock~ wrote: »

Peter - can you kindly explain how on earth a motor dealer can have a fidicuary relationship with one of his customers (i.e. act in best interests and not to profit)? You risk shattering this country's favourite illusion surrounding car dealers!

Just because their CCL says 'credit broker' does not mean they have the same relationship with the client as in the Hurstanger case. At what point in the car buying process does one hand over a fee for the dealer to become the broker and create the relationship with the customer that creates the fidicuary liability. Is there also the requirement to disclose the 'secret profit' made on the car as well?

PS...Making a profit is not the issue here. There is no problem with a dealer making a profit.

However, Making a profit where the borrower may be losing out because of it is the issue. Law of agency is about good faith.