Not upheld: Motor finance commission (DCA) complaint against BMW Financial Services (GB) Limited

Decision detail

Summary

Mr A complained that BMW Financial Services failed to disclose a £600 commission it paid to the motor dealer who introduced his hire purchase agreement for a car. Mr A argued this prevented him from making a fully informed choice and may have led him to pursue alternative financing. The ombudsman found that while an undisclosed commission could theoretically create an unfair lending relationship under Section 140A of the Consumer Credit Act 1974 (as established in the Supreme Court's Johnson judgment), the specific circumstances here did not support this. The 3.9% APR was objectively low, the £2,000 deposit allowance significantly exceeded the £600 commission, and alternative financing would likely have been more expensive. The ombudsman concluded it was unlikely Mr A would have acted differently had the commission been disclosed, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's Johnson judgment, which established that an undisclosed commission could result in an unfair lending relationship under Section 140A of the Consumer Credit Act 1974, but that this is not automatic and depends on multiple factors. The ombudsman found that the £600 commission was a low amount relative to the £2,000 deposit allowance Mr A received and the objectively low 3.9% APR. The ombudsman concluded it was unlikely Mr A would have acted differently had the commission been disclosed, as alternative credit sources would likely have been more expensive, and Mr A's suggestion of adding the amount to his mortgage would have resulted in longer repayment terms and higher overall costs when accounting for the lost deposit allowance.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website