Rachel Reeves considers overruling supreme court in £44bn car finance scandal

The issue is the cost of the finance was inflated as it contained 'hidden commission' that a perspective purchaser doesnt see. Although you agree to it, i guess the argument is they should have declared it.

So now you get subjected to car finance ambulance chasing adverts at every turn now.
 
shifty_uk said:
It’s a behind the scenes thing, broker(dealer) can inflate the interest rate to make their commission bigger. Punter doesn’t know there’s a kick back happening for the dealer.

I think if a dealer is getting a kick back, they must declare it.

Which is why you should shop about.

Edit: I think even if it’s in the contract, the dealer must make it blatantly obvious(read idiot proof) upfront.
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Cold Fusion said:
The issue is the cost of the finance was inflated as it contained 'hidden commission' that a perspective purchaser doesnt see. Although you agree to it, i guess the argument is they should have declared it.

So now you get subjected to car finance ambulance chasing adverts at every turn now.
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the vast majority of loans are underwritten.. so If I was to lend you a tenner and don't fully trust you to pay me back, I will share your loan with my mate. So you borrow a tenner of me, I will borrow a fiver of my mate and offer to give him back 6 pounds. Then I will offer you the tenner but want 12 pounds to cover the 6 pounds for my mate and make a pound profit. If I'd fully trusted you and leant the tenner all by myself; I would only want 11 pounds back. This is all normal; and I would tell you the amount you have to pay back upfront. It's up to the person if they agree to it or not.

likewise; if a loan company was offering me a fiver for every loan of their's that I sell as comission... while another is only offering me 4 quid... dam right I will be trying to offer you the loan that's going to give me a fiver, regardless what the APR is that the loanee has to pay. It shouldn't be none of your business how much I'm getting as comission. you just need to know the APR that you have to pay; again it's up to you if you accept it or not. Bare in mind that a lot of stores/garages deal exclusively with one loans company for a period of time so they can't offer you alternatives, yeah of course you can fet a loan independent from the store/garage.

Madness... we (who work) all do a job and expect to get paid for it, most of us don't ask nor do we care about how much the person serving us is getting paid..
"WHAT.. you're gett paid more than minimum wage?!... if you took a paycut and got paid minumum wage, I could get this happy meal for cheaper!"..
 
shifty_uk said:
It’s a behind the scenes thing, broker(dealer) can inflate the interest rate to make their commission bigger. Punter doesn’t know there’s a kick back happening for the dealer.

I think if a dealer is getting a kick back, they must declare it.

Which is why you should shop about.

Edit: I think even if it’s in the contract, the dealer must make it blatantly obvious(read idiot proof) upfront.
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like insurance companies and freeholders.
 
I literally used to do this for a few years a long while back now.

We would get the decline books from a mainstream car finance company, take the information and try to place them with sub prime lenders.

However now and then the ones that got declined wouldn't be bad, it would be some stupid reason or whatever, stuff happens like that in finance.

So we would call them up and say, sorry you got declined but we can still get you a loan at X interest rate.

The rates weren't actually that terrible, but the fact there was nothing wrong with these people could have easily got a personal loan themselves much cheaper.

The lender would give us a few different rates, usually a percentage apart with a commission amount, which was obviously much higher the higher we could get them to sign up.

This was pre FCA regulation and I was just doing a job a was told to do.
 
slinxy said:
sorry asking as a person who has never had a car finance loan, but has had personal loans, purchase loans and mortages...
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but you listen to the media - who explained background to story of selling increased APR loans to susceptible clients for a kick-back ?
perhaps not so dissimilar to mortgage rates, are those companies objective&open on rates they offer.

Customers do need to share some responsibility in taking these car loans, as Hagar alludes - Kier must have some buyers regret on employing Reeves.

Maybe reeves should start an investigation into the likes of Klana, which is much more current.
 
Cold Fusion said:
The issue is the cost of the finance was inflated as it contained 'hidden commission' that a perspective purchaser doesnt see. Although you agree to it, i guess the argument is they should have declared it.

So now you get subjected to car finance ambulance chasing adverts at every turn now.
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It isn't even just that the commission was "hidden", it is that the interest % could be increased by the broker / car sales person as a means to increase their commission. So the actual cost of the car loan was not was it was "meant to be" as priced by the lender and their risk model, but by the broker based on how much extra they thought they might be able to squeeze out of people. A horrendous practice.....

I don't have an issue with there being commission, ore even commission which wasn't declared, but the fact they could just increase the cost to the buyer in a bid just to make more money, is shocking. I work in this sector and have previously worked in roles where I could "sacrifice" commission to make the product cheper to the customer, which I think is also fine, but it would never have sat well with me to charge someone more just to line my pockets.
 
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Sometimes the Supreme Court comes with up some bonkers decisions. Like deciding warehouse workers at Asda and checkout staff should be paid the same, or council office workers and bin men regarding Birmingham council. Not saying they should be overruled but they can really take the mickey sometimes.
 
jpaul said:
but you listen to the media - who explained background to story of selling increased APR loans to susceptible clients for a kick-back ?
perhaps not so dissimilar to mortgage rates, are those companies objective&open on rates they offer.
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Naaa I never listen to the media… most would just side to the story that will get them the most clicks/sales…

BDEE said:
It isn't even just that the commission was "hidden", it is that the interest % could be increased by the broker / car sales person as a means to increase their commission. So the actual cost of the car loan was not was it was "meant to be" as priced by the lender and their risk model, but by the broker based on how much extra they thought they might be able to squeeze out of people. A horrendous practice.....

I don't have an issue with there being commission, ore even commission which wasn't declared, but the fact they could just increase the cost to the buyer in a bid just to make more money, is shocking. I work in this sector and have previously worked in roles where I could "sacrifice" commission to make the product cheper to the customer, which I think is also fine, but it would never have sat well with me to charge someone more just to line my pockets.
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If it was a case that bob the car sales man, could make up the loan APR on the spot just to make extra wonga then yes it shouldn’t have been allowed.

The practice of paying people bare minimum salary and the possibility of high commission is just predatory, something that will just cause their staff to prey on the customers, and competition/ill-will between colleagues.
 
It is a bit iffy, it's kinda a grey area for me - I do want us to have these consumer protections, we don't want stuff like the US where even things like unsubscribing from a newspaper or a gym is a nightmare, you can't use the same method you signed up by etc.

With commissions there's a history of IFAs acting more like dodgy salespersons than advisors because of the kickbacks they'd get, but in recent years that's been cleared up with more transparency, options to pay a set rate for advice etc.. so a car dealer having a hidden commission I guess the regulators want the same kind of transparency - but unlike the IFA the car dealer is just offering you one product essentially - financing for a car and you can see how much it's going to cost vs paying cash/getting a loan yourself - whereas with the IFAs they're actually supposed to be advising you on a whole range of products and when they were selecting some and recommending them over better products because of commissions then that is somewhat different - no one thinks the car dealer is a financial advisor.

Anyway - the funny thing is that thanks to out consumer rights there's the obvious way of flipping this thing into your own favour; because the car dealers were so incentivised to sell finance and get a nice commission that way they were more happy to compromise on price - as a customer you could get a better deal on the car by taking the finance and the using your consumer rights/14 day cooling off period to cancel the finance and pay in full from savings or a bank loan/mortgage drawdown at a better rate.
 
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slinxy said:
If it was a case that bob the car sales man, could make up the loan APR on the spot just to make extra wonga then yes it shouldn’t have been allowed.
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This is the crux of the issue, dealers were being allowed to add a % to the loan just for profit to them without telling the customer, I know how it works as one business I worked for did leasing for equipment and services, and the leasing provider would allow anywhere from 0.5 to 5% to be added to the APR at suppliers discretion and the company taking the lease knew nothing about the margin being added for the supplier.

New deals now show exactly how much commission they are making on the finance, and that will help people make a more informed decision if they want to perhaps look at other options or query why a commission is so high etc.
 
Journey said:
This is the crux of the issue, dealers were being allowed to add a % to the loan just for profit to them without telling the customer, I know how it works as one business I worked for did leasing for equipment and services, and the leasing provider would allow anywhere from 0.5 to 5% to be added to the APR at suppliers discretion and the company taking the lease knew nothing about the margin being added for the supplier.

New deals now show exactly how much commission they are making on the finance, and that will help people make a more informed decision if they want to perhaps look at other options or query why a commission is so high etc.
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Then people should have been more inquisitive and as has been said, a few quid extra on the finance could have led to a few quid off the original deal.

Impossible to prove really.
 
Hagar said:
Then people should have been more inquisitive and as has been said, a few quid extra on the finance could have led to a few quid off the original deal.

Impossible to prove really.
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I complete disagree with you, that is all I have to say in the matter.
 
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Tram said:
www.theguardian.com

Rachel Reeves considers overruling supreme court in £44bn car finance scandal

Exclusive: Chancellor could step in if justices uphold entirety of ruling over commission paid to brokers
www.theguardian.com www.theguardian.com

If she does this then it makes the justice system a joke and untrustworthy. The courts are there to be independent and provide fair outcomes.
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No, the judiciary implements the law (and insofar as it is unclear, interprets it). If the legislature and executive can pass law which alters judicial precedent, they're entitled to, and it happens pretty often. That's parliamentary sovereignty.
 
manic111 said:
No, the judiciary implements the law (and insofar as it is unclear, interprets it). If the legislature and executive can pass law which alters judicial precedent, they're entitled to, and it happens pretty often. That's parliamentary sovereignty.
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It needs for a vote like everything else, otherwise we no longer live in a democracy.
 
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