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

Decision detail

Summary

Mr C complained that Oodle Financial Services failed to disclose a commission of £1,253.89 paid to the credit broker that introduced his business, arguing this created an unfair lending relationship under Section 140 of the Consumer Credit Act 1974. In July 2021, Oodle provided Mr C with hire-purchase finance for a used car with a total cost of £18,076.60 over 60 months at 20.8% APR. 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 fixed (not discretionary), represented less than 11% of the amount borrowed and less than 20% of total credit cost, and there was no evidence of a commercial tie. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's test from Hopcraft, Johnson & Wrench, which established that an undisclosed commission could render a lending relationship unfair under Section 140 CCA only in specific circumstances: where there was a discretionary commission arrangement, a high commission relative to the cost of credit, or a commercial tie. In this case, none of these factors were present. The commission was fixed (not discretionary), represented less than 11% of the amount borrowed and less than 20% of total credit cost (unlikely to be considered high), and there was no evidence of a commercial tie. The ombudsman concluded that even if the commission had been disclosed, it would not have been a major consideration for Mr C given the amount and the lack of a direct link between the commission and the interest rate he agreed to pay.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website