Secret Commissions?

~Brock~

OK - let's examine the law of agency then.

Exactly how is the motor dealer the agent of the customer, when he is quite clearly the agent of the creditor?

How is the customer, by the dealer receiving a commission, losing out when any commission (if there is one) will be included within the amount charged for the credit by the lender?

The reason why car finance (or any other debtor-supplier finance) is different to arranging a secured loan through a broker is because the customer approaches the broker to arrange the loan only, and the broker becomes the agent of the customer for that purpose. Providing a fidicuary relationship has been created (partly evidenced by the payment of a fee), agency law states that the broker should at all times act in the best interests of the customer. Such tests as to whether an agency relationship has been created fail in a customer/motor dealer situation.

If you want to take one of these cases to court on the basis of your arguments then you are a brave man. You could at least add a caveat to some of the advice you have been giving less knowledgable posters.

magiciansgirl

petermb wrote: »

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

Thanks Peter, I'm not planning to go after the broker in fact, but to double-check what I believe they were paid without my knowledge. I've had some paperwork from the lender (which I think they sent by accident) which seems to state that two payments were made to the broker. Before I take them on I need to be sure I'm right!

Kind regards,

petermb_2

~Brock~ wrote: »

OK - let's examine the law of agency then.

Exactly how is the motor dealer the agent of the customer, when he is quite clearly the agent of the creditor?

How is the customer, by the dealer receiving a commission, losing out when any commission (if there is one) will be included within the amount charged for the credit by the lender?

The reason why car finance (or any other debtor-supplier finance) is different to arranging a secured loan through a broker is because the customer approaches the broker to arrange the loan only, and the broker becomes the agent of the customer for that purpose. Providing a fidicuary relationship has been created (partly evidenced by the payment of a fee), agency law states that the broker should at all times act in the best interests of the customer. Such tests as to whether an agency relationship has been created fail in a customer/motor dealer situation.

If you want to take one of these cases to court on the basis of your arguments then you are a brave man. You could at least add a caveat to some of the advice you have been giving less knowledgable posters.

There are test cases that are moving forward just now. Once I get a result either way I will come back to you Brock.

The law of agency is pretty clear that if an individual or company puts itself forward as an intermediary and agrees to act as such it is taking on the role of an agent. The issue that seems to be a sticking point is the charging of a fee. My understanding is that it is not necessary to have charged a fee to be placed in an agency arrangement.


Both lender and broker/agent/dealer/adviser, whatever you wish to call him are jointly and severally liable

~Brock~

petermb wrote: »

There are test cases that are moving forward just now. Once I get a result either way I will come back to you Brock.

Thank you - please do. We obviously have differing views of this so the outcomes of any such cases will be both interesting and enlightening.

I still maintain my view however that you should not advise other posters on this by describing it as a cut and dried issue, when it obviously is not at this stage.

magiciansgirl

Right, advice welcome please. The broker who organised my sub-prime loan with Blemain has still not complied with the SAR despite a letter before action. I tried phoning to find the name of their Compliance Officer and the number I have for them is now unobtainable. Yet I know my letters have been received as they have been signed for. I am sure they have received £2887 in hidden commission and I paid a broker fee of £2000. Should I add this to my court claim regarding their failure to supply the SAR?

cyril82

What i don't understand about this law is what it is supposed to achieve.

the top and bottom of it is loan brokers always have and always will get paid by the lender for arranging a loan.

They also always have and always will have a "selection" of lenders that they favour and that favouritism is likely to be based more on factors such as having a high success rate for applicants being accepted or paying good commission or both. Not whether or not it is the best deal for you.

That is why it is always down to you to make sure you read an agreement and make sure it is right for you.

Most loan brokers do disclose fees or state that they may receive a fee for arranging a loan and that you authorise them to retain that fee in their T&C's, if ocean haven't i'd be surprised.

Brokers are never going to start sharing commission from lenders, they have the upper hand, especially in sub prime markets, "either agree to us getting commission or we won’t get you a loan" will be and already is most brokers stance.

Car dealers already have a similar policy, in years gone by they used to have a cash price and finance price, the finance price was the one in the window of the car but if you had a pocket full of lovely lolly you could get a nice discount, Those were the days, now it's a complete reverse dealers are usually far more willing to offer you a discount if you take the finance and not long ago, when i bought my last car the guy at the main dealers actually tried to add £500 to the price when i told him i didn't want their finance and would pay cash, of course i didn't pay it, but my point is one way or another they want that money and one way or another they will get it, or you just won't get your loan, in the case of brokers, or car prices will go up. We already pay inflated prices in dealers as it is.

I personally have never had a problem with a broker getting a commission from the lender, i have a far bigger issue with them wanting a fee from me.

magiciansgirl

Right; I filed a complaint with the ICO against the broker for non-compliance with my SAR. The very next day, though that is just coincidence, I got a call from a chap saying that though the broker had gone into administration in February, my SAR had nevertheless been passed to him. Nothing he could do now, etc. so didn't want me to waste my time and this was purely a courtesy call. I didn't say I had gone to the ICO and I also didn't tell him that I knew his name because he had written to me from the broker previously. Am waiting to see what the ICO come up with as I believe the parent company are still trading.

Sprightlyone

Anyone any further forward on these secret commissions?

~Brock~

petermb wrote: »

There are test cases that are moving forward just now. Once I get a result either way I will come back to you Brock.

Wow.....the ressurecton of this thread has brought back memories

Can I just add that I never did hear about the outcome of any 'test cases', and my earlier points in this thread still stand. Be very wary of anyone trying to imply that reclaiming 'secret' commissions is a walk in the park.

whipped

~Brock~ wrote: »

Wow.....the ressurecton of this thread has brought back memories

Can I just add that I never did hear about the outcome of any 'test cases', and my earlier points in this thread still stand. Be very wary of anyone trying to imply that reclaiming 'secret' commissions is a walk in the park.

Maybe not a walk in the park but nevertheless there have been some successes.