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MSE News: Car finance redress scheme likely delayed to November due to legal challenges
Comments
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Clicked on a "checker" service on social media or accidentally used a fake MSE link
You can reply and ask to see what contract they claim you have
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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In reverse order:
"the FCA have ruled it IS miss-selling". Except that last August's Court Judgement "ruled" on what amounted to "mis-selling" - and set very clear limits in what constituted "mis-selling".
In short, a combination of factors would be required. (actual interest rate, actual commission amongst them).
The FCA are over-reaching - trying to claim that if just one of the supposed "mis-selling" factors applied - then recompense should be paid.
So no wonder some Lenders are resisting the FCAs blanket approach when the Court laid out criteria that would not ALL apply to many of the claims.
Who was "forced" to pay more commission ? If Customer X didn't like the Finance deal - expressed as a monthly payment and APR - they could have shopped around.
I don't understand your point about 5.9% versus 7.9%. If the Customer was shown a monthly cost - with 7.9% stated clearly - the Customer knew exactly what he/she was getting. Commission within that 7.9% is about as relevant as wanting to know Tesco's profit margin on Cornflakes !
As I said before…. IF the monthly amount was higher than a stated APR - that would be wrong. Do any such cases exist ?
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You could be on a mugs list for example, if you've made attempts through other claims companies historically for PPI. It could just be cold spam.
"the FCA have ruled it IS miss-selling". Except that last August's Court Judgement "ruled" on what amounted to "mis-selling" - and set very clear limits in what constituted "mis-selling".
The FCA didn't treat it as mis-selling. It required the courts to have a legal interpretation of the Act that was different to the intention. Because the courts ruled accordingly, the FCA is now referring it to mis-selling. But in reality, consumers have got a lucky break.
I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
I don't understand your point about 5.9% versus 7.9%. - Therein lies the problem with the understanding of this case! 7.9% is more than 5.9%!
If the Customer was shown a monthly cost - with 7.9% stated clearly - the Customer knew exactly what he/she was getting. - Except they didn't did they? They didn't know the lender had offered 5.9% and it was increased artificially so the salesman got more money
Commission within that 7.9% is about as relevant as wanting to know Tesco's profit margin on Cornflakes ! - And this is why you seemingly don't understand this case - it wasn't about the commission within the 7.9%, it was the fact they were financially incentivised to increase the rate (and thus total amount) of interest meaning the customer unknowingly lost out:
Car salesman did a credit check with a lender, the lender offers 5.9% as an example, the salesman gets £500 commission. The lender also has a sliding scale of commission so if salesman manages to push 6.9% he gets £1000 and 7.9% he gets £1500. Sales were incentivised therefore to cheat customers by giving them a higher rate on their interest so the salesman got more money - hence the FCA banned the practice.
You keep talking about shopping around like every person trying to get PCP had great credit and could get low rate bank loans, the reality is that simply wasn't the case. PCP was often lower as it was secured on an asset rather than a bank loan. As an example, Evans Halshaw are doing 2.9% on an MG3, while MSE best loan rates are 5.9% for up to £25k. If the customer has a budget and a fictional Evans salesman knows they could get 5.9% loan, they could bump the APR offered from 2.9% to 4.9%, be cheaper than the bank loan and still get higher commission from cheating the customer.
The court fights were separate e.g. arguing a lender using in house finance wasn't a "hidden" link or that certain commission levels were not excessive. The DCA miss-selling is settled, lenders did wrong, they are rightly being told to pay it back
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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If the Customer was shown a monthly cost - with 7.9% stated clearly - the Customer knew exactly what he/she was getting.- Except they didn't did they? They didn't know the lender had offered 5.9% and it was increased artificially so the salesman got more money"
Err?? Of course the Customer knew what they were offered. A monthly payment based on a rate of 7.9%.
That is not different from a supplier of any other good. i.e. they do not reveal their added margin.
We don't sign up to a mortgage without checking and comparing interest rates - and perhaps penalties for early closure. We don't ask for the Lenders Cost of Funds (wholesale interest rate)
Why should borrowing for a car be any different ?But my opinion is secondary.
The Supreme Court unanimously ruled that car dealers did not owe fiduciary or disinterested duties to their customers in these typical car finance transactions. As such no fiduciary relationship existed, and no basis for common law bribery or equitable liability arose.The Supreme Court ruled in favour of the Complainant in only one of three cases:
- That the size of the commission in one case was unfair at 55% of the total charge for credit.
2% Commission seems unlikely to be deemed "unfair" - Documents implied, falsely, that a panel of Lenders existed - when in fact there was only one.
- Documentation buried key statements.
Moreover, it was the interaction of these elements that the Court deemed "unfair".
So the FCAs blanket redress should be resisted by the Lenders.
:A0 - That the size of the commission in one case was unfair at 55% of the total charge for credit.
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Again they didn't know they were offered 5.9% by the lender, only the 7.9% they were told about because sales hid the lower rate
That is not different from a supplier of any other good. i.e. they do not reveal their added margin.
This is irrelevant. The margin was priced in to the car sale and the finance, this is about making customers pay more interest so the salesman got more commisssion.
I feel you are being deliberately obtuse about this so adding you to the ignore list.
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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Who is being "obtuse" ?
What is the difference between asking a Car Dealer to reveal its mark-up (margin) on the loan part and revealing its mark-up on the wholesale price of a car ?
Sensible Buyers care about the end price.Have you ever had a new boiler fitted ? Or kitchen units ?
Likely the fitter will show you a brochure with a Retail / Recommended Selling Price. They may tell you to take 10-15% off.If you know someone in the Trade, they may reveal that they buy at 50% of the "brochure" price. (e.g. H*****)
When buying doors for our extension, I was told to assume paying 35% of the catalogue price. (e.g. J*****)If you believe that our whole economy is riddled with "secret" margins that should be disclosed, by all means make that case.
Why should Car Dealers be singled out ?
No one prevents the Buyer from shopping around.:A0
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