FCA investigates car finance

Nasqueron

robildn said:

dunstonh said:

I got a response back from Toyota, they did not answer my question regarding whether any of my finance deals I had with them involved DCA. They just listed all my agreements I had with them, 3 out of 5 had commission paid to the dealership.

Did you use the template from this site or you own complaint letter?

They just said there was no secret commission paid and that I could have asked for the exact commission paid at the time. They did not answer my question regarding the interest rate that they made available to me either. So they closed my complaint and told me I can go to ombudsman within 6 weeks etc.

Did your complaint letter make reference to secret commission?   (if so, that isn't what this issue is about as commission is not required to be disclosed)

With one of the cars I recall the dealership came back with a slightly better interest rate when I did not agree to the initial monthly payments they offered. I did not think about this at the time, but now it definitely seems like it was DCA as they managed to offer me a lower interest rate when I did not agree to the initial offer they made, this is without any changes on my part, i.e. not changes to deposits etc.

DCA could be used positively and negatively.  Lowering the rate is not an area of concern.

Thinking if I should go to ombudsman now or wait till September. 

The FOS are not taking on cases regarding DCA.

 I was a bit hasty when I first heard of the investigation and fired off my own email rather then use the template. Going forward I will be more patient and follow the resources provided by MSE!

Just got a response to my email asking to clarify about the DCA, they have confirmed:
from Toyota email:
" After checking our records, we can tell you that we did pay a discretionary commission to the dealer.

 We normally have eight weeks to send you a final response letter but the pause introduced by the Financial Conduct Authority means the period starting on 11 January 2024 and ending on (and including) 25 September 2024 is not counted when calculating this eight week period.

We'll be in touch with you after 25 September 2024."

I did not mention anything about secret commission. I think they were just trying to get rid of me and hoping I do not question them any further. Need to wait till 25th of September now and see what happens.

They will assume all emails about this are relating to DCA. The MSE template is a little excessive e.g. the demand for DSAR which is unnecessary. Do note, it is not an issue about secret commission, it's purely the potential problem of them hiking your interest rates to get more commission - if they didn't do it in your case or indeed, lowered the interest rates, you wouldn't be affected

robildn

Nasqueron said:

They will assume all emails about this are relating to DCA. The MSE template is a little excessive e.g. the demand for DSAR which is unnecessary. Do note, it is not an issue about secret commission, it's purely the potential problem of them hiking your interest rates to get more commission - if they didn't do it in your case or indeed, lowered the interest rates, you wouldn't be affected

See, this was exactly what I initially asked them regarding interest rates, if DCA was invloved. My question to them was, if the rate offered by the dealer was that the best rate available to me at the time from them.
They completely ignored this part of my question. Which makes me believe that they indeed made me sign up to a deal that was not the best available to me. In one case the commission they paid out to the dealership for signing me up to finance was almost £1.5k!

Nasqueron

robildn said:

Nasqueron said:

They will assume all emails about this are relating to DCA. The MSE template is a little excessive e.g. the demand for DSAR which is unnecessary. Do note, it is not an issue about secret commission, it's purely the potential problem of them hiking your interest rates to get more commission - if they didn't do it in your case or indeed, lowered the interest rates, you wouldn't be affected

See, this was exactly what I initially asked them regarding interest rates, if DCA was invloved. My question to them was, if the rate offered by the dealer was that the best rate available to me at the time from them.
They completely ignored this part of my question. Which makes me believe that they indeed made me sign up to a deal that was not the best available to me. In one case the commission they paid out to the dealership for signing me up to finance was almost £1.5k!

They will have ignored it because that is part of the FCA investigation. If the FCA say DCA was fine as it was not banned, then whether they did or not is immaterial, so keeping quiet is their best bet. If the FCA say DCA is bad and that anyone who had it has to be investigated and, let's say, the difference in interest rates if your rate was increased should be refunded, then they will have to admit it. I doubt that the FCA would allow them to charge people who complained more if DCA meant they got a lower rate but it would be hilarious if they did and I would love to see the complaints on here after Martin and co told everyone to complain now, despite already knowing the process was on hold.

dunstonh

robildn said:

Nasqueron said:

They will assume all emails about this are relating to DCA. The MSE template is a little excessive e.g. the demand for DSAR which is unnecessary. Do note, it is not an issue about secret commission, it's purely the potential problem of them hiking your interest rates to get more commission - if they didn't do it in your case or indeed, lowered the interest rates, you wouldn't be affected

See, this was exactly what I initially asked them regarding interest rates, if DCA was invloved. My question to them was, if the rate offered by the dealer was that the best rate available to me at the time from them.
They completely ignored this part of my question. Which makes me believe that they indeed made me sign up to a deal that was not the best available to me. In one case the commission they paid out to the dealership for signing me up to finance was almost £1.5k!

As mentioned above, the FCA has suspended complaints into DCA whilst it looks into it.    Current information suggests that the FCA doesn't have a problem with new vehicles where it was used as an overall package but is looking at second-hand vehicles.

As complaints are suspended, they are not going to address any part of your complaint unless DCA didn't exist at all (where they can auto-reject).

There is good DCA, neutral DCA and bad DCA.     You don't know what you have until the FCA have completed their review and made a decision and then instruct firms to deal with the complaints, which thanks to MSE, could take 18 months.

robildn

dunstonh said:

robildn said:

Nasqueron said:

They will assume all emails about this are relating to DCA. The MSE template is a little excessive e.g. the demand for DSAR which is unnecessary. Do note, it is not an issue about secret commission, it's purely the potential problem of them hiking your interest rates to get more commission - if they didn't do it in your case or indeed, lowered the interest rates, you wouldn't be affected

See, this was exactly what I initially asked them regarding interest rates, if DCA was invloved. My question to them was, if the rate offered by the dealer was that the best rate available to me at the time from them.
They completely ignored this part of my question. Which makes me believe that they indeed made me sign up to a deal that was not the best available to me. In one case the commission they paid out to the dealership for signing me up to finance was almost £1.5k!

As mentioned above, the FCA has suspended complaints into DCA whilst it looks into it.    Current information suggests that the FCA doesn't have a problem with new vehicles where it was used as an overall package but is looking at second-hand vehicles.

As complaints are suspended, they are not going to address any part of your complaint unless DCA didn't exist at all (where they can auto-reject).

There is good DCA, neutral DCA and bad DCA.     You don't know what you have until the FCA have completed their review and made a decision and then instruct firms to deal with the complaints, which thanks to MSE, could take 18 months.

I am not as knowledgeable about DCA but from what I understood the fact that brokers(dealerships) were able to charge their own interest rates (and getting paid commission based off of this) rather than the best/only rate offered by the finance firm meant that customers generally paid more then they would otherwise have paid?
I mean most sales people make most of their money from commissions, and from my experience so far most will do whatever they can to get as much commission as they can.
What would be good DCA? were brokers able to go back to the finance firm and say this customer is good, can you lower their interest rate?

dunstonh

I am not as knowledgeable about DCA but from what I understood the fact that brokers(dealerships) were able to charge their own interest rates (and getting paid commission based off of this) rather than the best/only rate offered by the finance firm meant that customers generally paid more then they would otherwise have paid?

DCA could be used positively or negatively.  i.e. increase or decrease rates.    It was used both ways by car dealers.

Sometimes, it was used on specific models.  e.g. a new car launch where a specific model had a lower interest rate to help drive sales.  Or where the firm needed to shift model to buy in more from the manufacturer and made cheaper financing deals to hit manufacturer targets.

Sometimes it was used in the overall package.    i.e. lower the car price or give a dealer deposit but then load the interest rate to make up the difference.     A bit of smoke and mirrors but often similar outcomes.   Many dealers have submitted to the FCA that its the whole package that matters and not just one bit of it.    We will know how the FCA feel about that after September.