Not upheld: undisclosed commission payment / unfair relationship under Section 140 Consumer Credit Act 1974 complaint against Moneybarn No.1 Limited trading as Moneybarn

Decision detail

Summary

Miss H complained to Moneybarn about an undisclosed £500 commission payment made to the broker who arranged her motor finance conditional sale agreement for a £5,392 car. Moneybarn rejected the complaint, and Miss H referred it to the FOS. The ombudsman applied the Supreme Court's framework from Hopcraft, Johnson & Wrench and found that the commission was not discretionary, the broker had no ability to set interest rates, there was no commercial tie, and the commission amount was not high relative to the credit cost. The ombudsman therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's framework from Hopcraft, Johnson & Wrench, which identifies three key factors that could make a motor finance relationship unfair: discretionary commission arrangements, high commission relative to credit cost, and commercial ties. The ombudsman found that none of these factors were present in Miss H's case. The £500 commission was not discretionary, the broker could not set the interest rate, and there was no commercial tie. Relative to the amount borrowed and interest charged, the commission was not high. Therefore, the ombudsman was not persuaded that Moneybarn failed to act fairly and reasonably.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website