Not upheld: undisclosed commission payment and fairness of credit relationship complaint against Moneybarn No.1 Limited trading as Moneybarn

Decision detail

Summary

Mr R complained to Moneybarn about an undisclosed commission payment of £451.17 paid to the broker who arranged his conditional sale agreement for a motorcycle, arguing the loan should not have been agreed as it was unaffordable. Moneybarn rejected the complaint, and Mr R referred it to the FOS. The ombudsman applied the Supreme Court's Hopcraft, Johnson & Wrench framework for assessing motor finance commission fairness and found that the commission arrangement was not discretionary, the broker could not set interest rates, the commission amount was not high relative to the total credit cost, 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 broker could not set interest rates, the £451.17 commission was not high relative to the £14,483.30 total payable, and there was no evidence of commercial ties. The ombudsman rejected the argument that the commission was high relative to Mr R's 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