Not upheld: Motor finance commission (DCA) complaint against FCE Bank Plc (Ford Credit)

Decision detail

Summary

Mr L complained that Ford Credit failed to disclose a £198.64 commission it paid to the motor dealer who introduced his hire purchase agreement for a car. He argued this prevented him from making a fully informed choice and breached applicable regulations. The ombudsman found that while an undisclosed commission could potentially result in an unfair lending relationship under Section 140A of the Consumer Credit Act 1974, multiple factors must be considered. Given the low commission amount, the objectively low interest rate of 0.9% APR, and the substantial £1,650 deposit allowance, the ombudsman concluded it was unlikely Mr L would have acted differently if the commission had been disclosed, and therefore the lending relationship was not unfair to him. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's decision in Johnson, which established that an undisclosed commission could result in an unfair lending relationship, but that this depends on multiple factors and is not automatic. The ombudsman found that the commission amount was low (£198.64) relative to the overall cost of credit, the interest rate was objectively low at 0.9% APR, and Mr L received a substantial deposit allowance of £1,650.00. Therefore, it was unlikely Mr L would have made a different decision if the commission had been disclosed, and the lending relationship was not unfair to him.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website