Brits with cars on finance could be in for a shout of getting a fair bit of cashback. Thanks to a landmark ruling, billions of pounds worth of compensation is there to be clamed.
Marcus Johnson, 34, was one of three claimants who took their case to the Court of Appeal last month. For Marcus from Cwmbran, Torfaen, in South Wales, it all started with his purchase of a £4,600 Suzuki Swift in 2017, BBC reports.
When he put pen to paper, Marcus had no idea car dealership Trade Centre Wales was cashing in 25% commission and he was the one who’d have to fork out for it as an addition to his monthly payments.
When the penny dropped for Marcus, his deal with MotoNovo Finance left him “furious” and seeing his bank account being drained of that extra money was “heartbreaking”.
(Image: Getty Images/Westend61)
“I paid £1,650 for what I can only describe as showing me around the showroom for 10 minutes and then printing off a bit of paper,” Marcus said. “I signed a few documents and then drove away in the car.”
The court of appeal said “burying such a statement in the small print which the lender knows the borrower is highly unlikely to read will not suffice”.
Despite not acting outside of the rules and regulations of the industry, dealerships had a duty to inform their clients. Now the finance company must pay Marcus the hidden commission they took, plus interest meaning he’s in for a windfall of just over £3,200.
As a result of Marcus’ plight, the car finance industry is preparing to compensate drivers tied up in similar situations.
An explainer on the MotoNovo Finance website reads: “On 11 January 2024, the Financial Conduct Authority (FCA) announced that it’ll be carrying out a review into discretionary commission arrangements within the motor finance industry.
“If you took out car finance to buy a motor vehicle, for example a car, van or motorbike, between April 2007 and 28 January 2021 (this includes hire purchase agreements, such as Personal Contract Purchases) and if your lender and dealer/broker had a discretionary commission arrangement.”
(Image: Getty Images)
It adds concerned customers ought to complete an online form on the MotoNovo Finance website.
Money Saving Expert Martin Lewis says those who may be in the same boat with a discretionary commission arrangement should “act now”.
According to the Money Saving Expert website, drivers should “avoid going to a claims management firm to complain” because it would just take a cut money due.
How future complaints will be dealt with isn’t clear, whether it’s en masse or individually so the site warns “there could be more hoops to jump through as the investigation unfolds”.
It adds: “However, the FCA (Financial Conduct Authority) have announced they are considering consulting on a redress scheme, which suggests that the chance of consumers getting paid back for mis-selling is more likely.”
Marcus said: “It was a big moment of relief and excitement and obviously happiness all at the same time – especially with how tough things are at the moment. I’m so happy that my case and the decision that was made could potentially help thousands of other families, to me that’s worth more than the money that I reclaimed in a way.”
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