Not upheld: Motor finance commission (DCA) complaint against Moneybarn No.1 Limited

Decision detail

Summary

Mr W complained that Moneybarn failed to act fairly by not disclosing a £676.67 commission paid to the credit broker that introduced his business for a conditional sale agreement on a used car purchased in May 2017. Mr W argued the undisclosed commission created an unfair relationship under Section 140 CCA. The ombudsman applied the Supreme Court's Hopcraft, Johnson & Wrench test and found that although the commission may not have been disclosed, it was unlikely to render the relationship unfair because it was a fixed payment (not discretionary), represented only 3.5% of the borrowed amount, and there was no evidence of a commercial tie. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's test from Hopcraft, Johnson & Wrench, which established that an unfair relationship under Section 140 CCA could arise where a discretionary commission arrangement existed, the commission was high relative to the credit cost, or a commercial tie existed. The ombudsman found none of these factors applied: the commission was fixed (not discretionary), represented only 3.5% of the borrowed amount and 5% of total credit cost (not high), and there was no evidence of a commercial tie. Therefore, even if undisclosed, the commission was unlikely to render the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website