Barclays Partner Finance Commission

AntF1985

Hi

When enquiring to DSG Finance about possible PPI on a previous used car loan , Ive recieved a response saying that they can confirm they've recieved a £700+ commission payment from Barclays, but it isn't in relation to PPI, so are they saying its not plevin?

Is this commission payment a regular thing?

I've been trying to look for old paperwork, but can only find the final statement, which says that the car was bought in 2015 for £5334.50, with £2289.90 interest, £40 document fee and a £299 completion fee.
I paid the car off in 2017 and an £577 early repayment rebate was applied.

With the amount of interest applied, do you think the APR was ballooned by barclays to cover this commission payment, my credit history has always been relatively good.

Any advice appreciated.

[Deleted User]

Yes, commission is common.

The APR isn't 'ballooned' - it's the rate they charge to cover the risk and their costs - operating, marketing, lending, sales.

AntF1985

There's a link... Can't post it. Google car finance customers overcharged. It's on The Mirror from this year

Nearlyold

AntF1985 wrote: »

Is this commission payment a regular thing?

Yes commission is a regular thing. It's how Brokers get paid, the alternative is to pay a fee to the Broker. Car dealers get commission from the finance company when you take out finance through them.

The commission comes out of the interest you pay. If you don't like the APR of the loan the broker or car dealer offers you can always go elsewhere or ask for a better rate.

DisneyLisa

thats not what that article is talking about

its talking about when the introducer/broker/car garage go with the finance provider that has the highest commision not the lowest apr for the customer.

AntF1985

Yeah,

This is what the FCA says on its website...

The Financial Conduct Authority (FCA) is considering changes to the way in which commission works in the motor finance sector after uncovering serious concerns about the way in which lenders are choosing to reward car retailers and other credit brokers. The findings form part of the final report of the FCA’s work on motor finance published today.

The FCA found that the widespread use of commission models which allow brokers discretion to set the customer interest rate and thus earn higher commission, can lead to conflicts of interest which are not controlled adequately by lenders. This can lead to customers paying significantly more for their motor finance.

The FCA is assessing the options for intervening in the market which would address the harm it has identified. This could include strengthening existing FCA rules or other steps such as banning certain types of commission model or limiting broker discretion.

Jonathan Davidson, Executive Director of Supervision – Retail and Authorisations at the FCA, said:

'We found that some motor dealers are overcharging unsuspecting customers over a thousand pounds in interest charges in order to obtain bigger commission payouts for themselves. We estimate this could be costing consumers £300 million annually. This is unacceptable and we will act to address harm caused by this business model.

'We also have concerns that firms may be failing to meet their existing obligations in relation to pre-contract disclosure and explanations, and affordability assessments. This is simply not good enough and we expect firms to review their operations to address our concerns.'

As part of its work the FCA also carried out mystery shopping of firms. The FCA found that where disclosures were given, these were not always complete, clear or easy to understand and as a result customers may not be given enough information to enable informed decisions. The FCA was also not satisfied that all lenders were complying with the rules on assessing creditworthiness including affordability.

The FCA will follow up with individual firms where failures were identified but expects all firms, both lenders and brokers, to review their policies, procedures and controls to ensure they are complying with all relevant regulatory requirements and are treating customers fairly.

AntF1985

I just find it bizarre that I only enquired about PPI but they've gone out theyre way to tell me about this commission

boo_star

AntF1985 wrote: »

I just find it bizarre that I only enquired about PPI but they've gone out theyre way to tell me about this commission

There is a connection between PPI and commission via Previn.

Perhaps they were just covering all the bases.