What is unfair commission?

Owlet_2

My lender tells me I did not have a DCA.

However I understand that compensation may still be payable if unfair rates of commission were involved. Do you know what level is regarded as unfair? I do not know what rate was paid to my car dealer but I will ask the lender if I know what is the cut off point. Or if a level is announced as unfair, will the lender have to contact me?

dunstonh

Do you know what level is regarded as unfair?

The FCA will decide that in due course.

 Or if a level is announced as unfair, will the lender have to contact me?

The FCA will decide that in due course.

paul_c123

From the more comprehensive statement to the market, from the FCA:

The Supreme Court agreed with several factors we had identified which could point towards an unfair relationship and fall foul of the Consumer Credit Act (CCA), whilst recognising it depends on the facts of each case.

Such factors could include:  

• the size of the commission relative to the charge for credit
• the nature of the commission, for example, whether it is discretionary
• the characteristics of the consumer
• compliance with regulatory rules
• the extent and manner of disclosure  

This clarity helps us because we have been looking at what is unfair and, prior to this judgment, there were different interpretations of the law coming from different courts. 

We will now consult on a redress scheme. Redress would depend on non-disclosure of the factors above and the interaction between them.

paul_c123

Personally I think there will be a lot of kickback from the lenders, because there will have been cases where dealers and lenders eg cut the profit (or even made a loss) on the basic sale of the car, but made the money on the finance. And vice versa. Its not as simple as "this finance commission is high compared to the average". There's 5 parts to a car bought on finance deal, all of which interact:

Part ex valuation
New car price
Deposit amount
Monthly payment and duration
Balloon amount