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

Decision detail

Summary

Miss K complained that Oodle Financial Services failed to act fairly by not disclosing a £1,199.00 broker commission paid on her hire purchase agreement for a used car, which she argued created an unfair lending relationship. The ombudsman applied the Supreme Court's test from Hopcraft, Johnson & Wrench and found that while the commission was undisclosed, it did not render the relationship unfair because it was a fixed 10% commission (not discretionary), was not high relative to the £11,990 borrowed, and no commercial tie existed between the broker and lender. The 28% APR was reasonable and disclosed in the agreement. 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 there was a discretionary commission arrangement, the commission was high relative to the amount borrowed, and a commercial tie existed. In this case, none of these factors were present. The commission was fixed at 10%, was not high relative to the £11,990 borrowed or the £9,092.60 cost of credit, and no commercial tie existed between the broker and Oodle. The 28% APR was not inherently unreasonable and was disclosed in the credit agreement. The ombudsman concluded that even if Miss K had known about the commission, it would not have been a major consideration in her decision to enter the agreement.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website