Not upheld: Motor finance commission (DCA) complaint against BMW Financial Services (GB) Limited (trading as Mini Financial Services / MINI FS)

Decision detail

Summary

Mr B complained that MINI FS failed to disclose a £400 commission it paid to the motor dealer who introduced his hire purchase agreement for a car in December 2019. Mr B argued this prevented him from making a fully informed choice and breached applicable regulations. The ombudsman found that while an undisclosed commission could potentially result in an unfair lending relationship under Section 140A of the Consumer Credit Act 1974, applying the Supreme Court's Johnson test, the lending relationship was not unfair in this case. The interest rate of 3.9% was objectively very low (in the lowest 5% of rates for that year), and the £400 commission was a low amount relative to the overall cost of credit. The ombudsman concluded it was unlikely Mr B would have made a different decision if the commission had been disclosed, and alternative credit would likely have cost him more. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman applied the Supreme Court's decision in Johnson, which held 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 £400 commission was a low amount relative to the overall cost of credit, and that Mr B's interest rate of 3.9% was objectively very low (in the lowest 5% of rates that year). Therefore, it is unlikely Mr B would have made a different decision if the commission had been disclosed, and any alternative credit would likely have cost him more. The ombudsman was not persuaded that the failure to disclose resulted in an unfair lending relationship.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website