Not upheld: undisclosed commission payment in motor finance arrangement complaint against Moneybarn No.1 Limited trading as Moneybarn

Decision detail

Summary

Mr D complained to Moneybarn about an undisclosed £330 commission payment between Moneybarn and the broker who arranged his conditional sale agreement for a used car worth £8,991. Mr D also initially complained the loan was unaffordable, but this was not pursued. The ombudsman applied the Supreme Court's Hopcraft, Johnson & Wrench framework for assessing motor finance commission fairness and found that the commission was not discretionary, the broker had no ability to set interest rates, the £330 payment was not high relative to the loan amount and interest, and there was no evidence of commercial ties. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's Hopcraft, Johnson & Wrench framework which identifies three circumstances where motor finance relationships may be unfair: undisclosed discretionary commission arrangements, high commissions relative to credit cost, or undisclosed commercial ties. The ombudsman found none of these circumstances applied: the commission was not discretionary, the £330 payment was not high relative to the £8,991 borrowed and £6,601.52 interest charged, and there was no evidence of commercial ties. The ombudsman rejected Mr D's argument that the commission was high relative to his disposable income, noting it was a one-off payment over a 59-month repayment period.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website