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

Decision detail

Summary

Mr R complained that Ford Credit failed to disclose a £336.59 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 resulted in an unfair lending relationship. Ford Credit provided a hire purchase agreement with a 2.9% APR and £1,484.80 in total charges, with Mr R receiving a £1,450.00 deposit allowance. The ombudsman applied the Supreme Court's Johnson decision and found that while undisclosed commissions can result in unfair relationships, this depends on multiple factors. Given the low interest rate, the substantial deposit allowance exceeding the commission amount, and the likelihood that alternative credit would have cost more, the ombudsman concluded Mr R would probably have entered the agreement anyway and the relationship was not unfair. 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 is not automatic and depends on multiple factors. The ombudsman concluded that the commission of £336.59 was a low amount relative to the deposit allowance of £1,450.00 and the objectively low interest rate of 2.9%. Given these circumstances, it is unlikely Mr R would have made a different decision if the commission had been disclosed, and any alternative credit would likely have cost him more. Therefore, the lending relationship was not unfair to Mr R.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website