Not upheld: undisclosed commission in hire agreement complaint against Volkswagen Financial Services (UK) Limited (trading as Audi Financial Services)

Decision detail

Summary

Mr V complained that Audi FS failed to disclose a commission payment to a credit broker when he entered into a vehicle hire agreement in July 2020. The agreement required total payments of £9,381.77 over 24 months, with Audi FS paying the broker a fixed commission of £438. The ombudsman found the agreement was a hire agreement rather than a credit agreement, meaning different regulatory rules applied and the broker, not Audi FS, bore responsibility for disclosing commissions. The ombudsman concluded that even if the commission had been disclosed, it would be unlikely to have affected Mr V's decision given its small proportion of the total cost and the broker's inability to alter terms. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman distinguished between hire agreements and credit agreements, finding that different regulatory obligations apply. Since the agreement was a hire agreement, section 56 CCA does not create statutory agency between the broker and owner for pre-agreement negotiations. The broker, not Audi FS, bore responsibility for disclosing commissions under applicable regulatory rules. Additionally, the fixed £438 commission represented only 4.7% of the total rental cost and the broker could not alter terms to increase commission, so disclosure would unlikely have affected Mr V's decision.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website