missold vehicle finance question

elseapark

below is a response I recieved on an enquiry I made to the lender, from my initial read it looks like there is a commission but it is not a DCA related commission. can anyone with experience on this subject help with interpreting this letter and whether I should pursue this or let it goDear Customer

 

Commission Information Request

 

You contacted us to query the commission arrangement relating to your Agreement with Startline Motor Finance. You wished to raise a complaint relating to this commission if the arrangement was a Discretionary Commission Arrangement (DCA).

 

We have reviewed your Agreement and can confirm that the related commission arrangement was not a Discretionary Commission Arrangement (DCA).

 

This means that the introducer had no discretion on the commission calculation or APR. This was not a Discretionary Commission Arrangement (DCA) and therefore the pause and temporary changes announced by the FCA on 11th January 2024 do not apply to your Agreement with Startline.

 

Should you wish to review the FCA announcement regarding temporary changes to handling rules for motor finance complaints, full details can be found on the FCA website – 

 

 

As per your initial request, as we have found that the commission was not discretionary, we have not opened a complaint.

 

Should you require further assistance from our team, please do not hesitate to contact our offices so that we may assist you.

 

 

Yours sincerely

Complaint Resolution Team

dunstonh

We have reviewed your Agreement and can confirm that the related commission arrangement was not a Discretionary Commission Arrangement (DCA).

That is all you need to know.  They didn't use DCA.  So, you can stop now.

As per your initial request, as we have found that the commission was not discretionary, we have not opened a complaint.

That is the correct outcome.   No DCA means no issue.

Ayr_Rage

Sing THE song from Frozen !

[Deleted User]

As a sub prime (I think) lender Startline likely never operated any DCA agreements as it wouldn't align with their business model.  It would help if they clarified that in the reply.  If you are happy with their response then take no further action as others have suggested.  They have said there was commission, whilst it is likely that the FCA review will only affect DCAs this is not a given due to recent appeals granted in the courts that could affect or extend that review, some of which are not DCAs (google for details they are published). However likely or unlikely this is, asking for the lender to investigate a complaint about undisclosed non DCA commission and referring it to FOS in good time means you are 'covered' from being restricted by time restraints if things pan out differently.  Again this is a personal decision, all of the indications atm are it is DCA only but you may want to consider your options.

Nasqueron

[Deleted User] said:

As a sub prime (I think) lender Startline likely never operated any DCA agreements as it wouldn't align with their business model.  It would help if they clarified that in the reply.  If you are happy with their response then take no further action as others have suggested.  They have said there was commission, whilst it is likely that the FCA review will only affect DCAs this is not a given due to recent appeals granted in the courts that could affect or extend that review, some of which are not DCAs (google for details they are published). However likely or unlikely this is, asking for the lender to investigate a complaint about undisclosed non DCA commission and referring it to FOS in good time means you are 'covered' from being restricted by time restraints if things pan out differently.  Again this is a personal decision, all of the indications atm are it is DCA only but you may want to consider your options.

You cannot complain about undisclosed commission as there is nothing wrong with it. Obviously you can send in a complaint and the FOS will accept it, but it will ultimately go nowhere and just waste the time of the team there because commission does not have to be disclosed

[Deleted User]

No it doesn’t, well not until the 2021 update expanded when it should be disclosed. However since 2014 commission arrangements should only be differential or involve volume / performance bonuses if the lender can justify the extra work undertaken by the firm, CONC 4.5.2. Many car finance sales involved volume and performance payments even where the commission for finance was not differential. Also if the commission arrangement is deemed unfair, its lack of disclosure does become wrong as it creates an extreme inequality of knowledge between the consumer and the lender. The dealer failing to disclose is not the issue here, the lender and the commission arrangements they created, paid and allowed the dealers to use is the issue. 

Nasqueron

[Deleted User] said:

No it doesn’t, well not until the 2021 update expanded when it should be disclosed. However since 2014 commission arrangements should only be differential or involve volume / performance bonuses if the lender can justify the extra work undertaken by the firm, CONC 4.5.2. Many car finance sales involved volume and performance payments even where the commission for finance was not differential. Also if the commission arrangement is deemed unfair, its lack of disclosure does become wrong as it creates an extreme inequality of knowledge between the consumer and the lender. The dealer failing to disclose is not the issue here, the lender and the commission arrangements they created, paid and allowed the dealers to use is the issue. 

Commission not being disclosed is not the issue as it's not banned

DCA being used to inflate the rates the finance was sold at, is being looked at

The commission being "unfair" is obviously subjective but as it's how a sales team earn money, suggesting people sue dealers (as you have suggested elsewhere) for not telling a customer how much they earn from a sale is obviously irresponsible given it's not illegal

[Deleted User]

I would never suggest suing a dealer for this, that question was about a non motor finance leasing broker who has a very different relationship (and likely a fiduciary duty) with the consumer / business in question. The FCA are looking at both. They can’t decide what a court would do, but if they think there would be a finding of unfairness based on probability and recent court outcomes, they can make the decision to apply this as the FOS did in the two indicative January outcomes.  The unfairness relates to the unfair relationship being created under s140 of the CCA, not the commission itself or how it was sold by the dealer being ‘unfair’. There is no reason to sue dealers, only lenders, as that unfairness can only exist / be created between lender and consumer. I think most people accept that dealers and sales teams make money that way. This is not any dealers fault, it is the lenders giving them access to the commission amounts, structures and incentives that go against their rules. Dealers just work with what is given to them and want to make money. Please don’t misunderstand, I do not think dealers have done anything wrong, just their job as sales people and businesses. It is the lenders who have erred by overstretching the power given to them to affect interest rates and over incentivising. Dealers do not decide those structures. Even the CONC guidance being looked at is only the lender being scrutinised, they shouldn’t offer differential commission (read DCAs and volume bonuses) without justifying the extra work by the firm, but they were offered to many dealers without this being considered as it drove sales of cars and finance.

[Deleted User]

I thought you meant the other comment. Never said sue dealers, only lenders. People are free to issue against who they choose and they balance their own risk. Should the FCA come out with a decision that excludes your finance commission and you still feel strongly the fact the amount and type was undisclosed by the lender (NOT DEALER!) is wrong, you will have no other recourse. Law firms can only proceed with cases where they believe the prospect of success is 50% or more lest they break their own SRA regs. That risk becomes a decision for the individual. Take Plevin in 2014 and the FCA guidance in 2017, some were happy getting an FCA ‘tipping point’ offer for PPI, others went to court and got 100% but risked a bigger bill for representation. Others did the same without representation as they were confident making a money claim backed by a supreme court judgement. Individual choice and balancing risk.