Not upheld: Motor finance commission (DCA) complaint against Oodle Financial Services Limited (trading as Oodle Car Finance)

Decision detail

Summary

Miss M complained that Oodle Car Finance failed to disclose a £1,186.50 commission paid to the credit broker that introduced her, arguing this created an unfair lending relationship. She entered into a hire purchase agreement for £16,950.00 over 60 months at 18% APR in December 2020. The ombudsman applied the Supreme Court's test from Hopcraft, Johnson & Wrench and found that while the commission was undisclosed, it was unlikely a court would find the relationship unfair because the commission was not discretionary, represented only 7% of the amount borrowed, and no commercial tie existed. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's test from Hopcraft, Johnson & Wrench, which established that undisclosed commission could render a lending relationship unfair only in specific circumstances: where a discretionary commission arrangement existed, the commission was high relative to the borrowing, or a commercial tie existed. In this case, none of these factors were present. The commission of £1,186.50 represented less than 15% of total credit costs and just over 7% of the amount borrowed, which was not high. No DCA existed, meaning the broker had no discretion to set the interest rate. No commercial tie was evidenced. Therefore, even though the commission was undisclosed, it was unlikely a court would find the relationship unfair.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website