Not upheld: undisclosed commission in hire purchase agreement complaint against Toyota Financial Services (UK) PLC

Decision detail

Summary

Mr M complained that Toyota Financial Services (UK) PLC failed to disclose a commission paid to the motor dealer when entering into a hire purchase agreement for a car in September 2022. The agreement was interest-free with zero cost to the credit over 42 months. The ombudsman found the complaint not upheld, reasoning that even if a commission was undisclosed, Mr M would unlikely have acted differently given the interest-free nature of the credit and that he could not have obtained better terms elsewhere. The ombudsman acknowledged the Supreme Court's Johnson judgment on undisclosed commissions but concluded that fairness depends on multiple factors including the cost of credit.

The Ombudsman's reasoning

The ombudsman considered that even if Toyota FS paid an undisclosed commission, it was unlikely Mr M would have acted differently given the credit was interest-free with zero cost. The ombudsman acknowledged the Supreme Court's Johnson judgment that undisclosed commissions can result in unfair lending relationships, but concluded that whether a relationship is unfair depends on multiple factors including the size of commission relative to the amount borrowed and cost of credit. The critical fact was that Mr M received interest-free credit, making it improbable he could have obtained better terms elsewhere.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website