Not upheld: Motor finance commission (DCA) complaint against Shawbrook Bank Limited

Decision detail

Summary

Mr and Mrs R borrowed £11,849 from Shawbrook Bank Limited in September 2014 to purchase a timeshare membership, repaying the loan in November 2014. In December 2023, they complained about undisclosed commission paid to the Supplier and the credit broker's status. The ombudsman found that while Shawbrook and the Supplier may have failed to comply with regulatory disclosure rules regarding commission, the Supreme Court's recent judgment in Hopcraft, Johnson and Wrench established that commission payments are lawful where no fiduciary duty is owed. The commission amount (10% of borrowed sum) was not high enough to have materially affected the consumer's decision, and the credit broker held necessary permissions. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's recent judgment in Hopcraft, Johnson and Wrench, which established that commission payments to intermediaries are legal where the intermediary does not owe a fiduciary duty to the consumer. The Supplier, when acting as credit broker, did not owe Mr and Mrs R a fiduciary duty, so remedies for secret commission were not available. While regulatory disclosure rules may have been breached, the commission amount (10% of borrowed sum, 5.44% of charge for credit) was not high enough to have materially affected the consumer's decision to enter the credit agreement. The credit broker held necessary permissions.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website