Court of Appeal decision on motor finance commissions

Importantly to note:

• 1. Secret Commissions: Complete non-disclosure renders commissions “secret” leading to primary liability for lenders.
• 2. Partial Disclosure: Partial disclosure negates ‘secrecy’ but fails to secure fully informed consent, resulting in accessory liability for lenders.
• 3. Consumer Credit Act: In specific cases, non-disclosure or partial disclosure may create an “unfair relationship” under the CCA leading to claims and where courts may award customers a remedy for relief under such agreements.

Appeals to the Supreme Court are eagerly anticipated. The FCA is also considering a pause on complaints relating to non-discretionary commission arrangements (DCA) commission but current suggestions intimate that this pause will be limited to the DCA and non-DCA commission complaints in the motor finance industry. We watch this space.

It is recommended that lenders, dealers and brokers urgently review commission and fee disclosure practices to mitigate potential liability for future transactions. For additional guidance, please contact Natalie Coates and for more information see our article.