Man of Honour
- Joined
- 21 Nov 2004
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- 47,155
Court sides with banks, shock.
Rachel Reeves considers overruling supreme court in £44bn car finance scandal
- Thread starter Tram
- Start date
Not everything is a conspiracy.
I agree, I listened to the judgement and the legal judgements seemed fair.
It was based on law not compensation culture
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What is the real lesson here? Read the small print (if it exists). Presume that lenders are out to surreptitiously screw you, which is apparently considered acceptable?
Was any guidance on change of behaviour actually offered?
I believe that the situation has rectified itself with more openness on contracts.
It was less the lenders, more the dealers out to maximise their profits. The lenders allowed a range of commissions on top of their lending rate that the dealers could add which increased their return at the expense of the buyer. A small commission was deemed acceptable.
It'd be nice if the real lesson was education for the masses about how 'buying' a car on finance every 3 years actually hurts their long term wealth. But I doubt it will happen
I entirely agree with this. I was taught economics at school in the 1980s, albeit a lightweight introduction, but it did cover the basics even back then. I'm not affected by any of this as I was taught at a very young age that you either buy something outright or you don't buy it at all, excluding mortgages. However, I do worry for youngfolk and the ease of credit availability.It'd be nice if the real lesson was education for the masses about how 'buying' a car on finance every 3 years actually hurts their long term wealth. But I doubt it will happen
I'd argue people making poor long term financial decisions probably benefits you if you're making good long term decisions. E.g they'll have less available cash to buy a house, therefore less competition for you when buying houses.It'd be nice if the real lesson was education for the masses about how 'buying' a car on finance every 3 years actually hurts their long term wealth. But I doubt it will happen
It'd be nice if the real lesson was education for the masses about how 'buying' a car on finance every 3 years actually hurts their long term wealth. But I doubt it will happen
By the sound of it, I think the first lesson needs to be understanding that people selling you things almost certainly have a primary aim of making as much money out of you and the thing you're buying, as is reasonably possible and that you need to look out for your own interests, not trust a salesman to sell you what's best for you rather than him.
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Spot on, always someone else's fault!
Soldato
- Joined
- 18 Oct 2012
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It'd be nice if the real lesson was education for the masses about how 'buying' a car on finance every 3 years actually hurts their long term wealth. But I doubt it will happen
i remember a conversation with a friend back in the day.
me: "why'd you buy a phone on finance, you know that ****'s more expensive?"
him "yeah i know, but i dont wanna spend a big lump all in one go"
me "but i know you can afford to drop £XXXX on a phone, and it's cheaper to just buy"
him "yeah but the monthly is just £XXX per month"
me *facepalm*
i can assume the same is for any other device
personally, i'm not a fan of debt, only the mortgage which is frankly impossible (for us mere mortals at least) to avoid loaning money for do i owe anyone for anything and i'd rather a £500 ****box than a "nice" car i'm £XXX per month on the hook for.
Well, the upheld complaint which involved particularly high commission might result in a few legitimate claims for similar cases but on the whole it seems unlikely everyone who took out finance will be able to raise a claim just because there was commission at all.
The government were (rightly imo) told to stay in their box and let the courts make a decision based on laws, not potential economic concerns the government had.
HM treasury contract the judges, even though they said they didn't take it into account. Who really knows if they weren't influence in a indirect way. We will never really know.
I've had a quick skim of the key parts of the judgment (https://supremecourt.uk/uploads/uksc_2024_0157_0158_0159_judgment_2bb00f4f49.pdf). Paras 267-290 are interesting, and are the basis for the rejections of the majority of claims.
In short, the SC held that it was true that the consumer placed some trust in the dealer, but no more than in a shop assistant or waiter. Those are also people who are selling as part of their service, and most people would agree that in usual circumstances, a shopkeeper would not have a duty to get the best deal for the customer. A customer is entitled to shop around, as is someone taking a car on finance. That seems like a pretty reasonable analogy to me.
In short, the SC held that it was true that the consumer placed some trust in the dealer, but no more than in a shop assistant or waiter. Those are also people who are selling as part of their service, and most people would agree that in usual circumstances, a shopkeeper would not have a duty to get the best deal for the customer. A customer is entitled to shop around, as is someone taking a car on finance. That seems like a pretty reasonable analogy to me.
These are judges who have all in the past been incredibly senior barristers, in all likelihood earning well over £1m a year at the height of their practices. Supreme Court judges, conversely, earn around £250k.
These are people who have probably taken 5-10x pay cuts (possibly more) to be in their current roles. They are not in it for the money.
Are the details of the discretionary commission case actually available, so we can see the mechanics of trade-off between RRP manufacturer|dealership discount , & APR might have been presented to the purchaser,
who may have also have visited other manufacturer dealers too, so probably not naive about the variety of discounts & aprs available - there is a white goods purchase aspect to the transaction.
( It's not as simple as the media summary where customer says deal is too expensive, and salesman goes way and find a lower apr deal )
Is there some tighter legislation abroad ? (eu laws LOL)
[ Usual self-righteous diatribe by Martin Lewis mans best friend on r4pm was laughable - it's not over now, the ruling was as expected ]
who may have also have visited other manufacturer dealers too, so probably not naive about the variety of discounts & aprs available - there is a white goods purchase aspect to the transaction.
( It's not as simple as the media summary where customer says deal is too expensive, and salesman goes way and find a lower apr deal )
Is there some tighter legislation abroad ? (eu laws LOL)
[ Usual self-righteous diatribe by Martin Lewis mans best friend on r4pm was laughable - it's not over now, the ruling was as expected ]
There are a few observations on this
1. The judgement seems sound but calls into question the ruling by the court of appeal. I really don't see this as that difficult a ruling and they royally ballsed it up and with consequence
2. The COA decision has encouraged these "ambulance chasing lawyers" to petition for claimants prematurely and to the detriment of the industry and what little reputation it has. That seems "unfair" and something that should be addressed by authorities
3. Car finance and the structuring of deals is still not transparent enough regardless of commission disclosure. As many other posters haven mentioned, there should be a duty of care to better explain these products. To many customers it must seem like a three cup one ball trick.
4. The manufacturers of new cars have a responsibility to structure their distribution networks such that they can be profitable without dealers having to maximise finance product income which is where some of the "sharp" practice emanates from. They have screwed dealer profitability to a point where F&I income is too important.
Overall I think this is the correct outcome but I fully expect the FCA to continue to look closely at the complexity in car purchase transaction when involving credit finance.
1. The judgement seems sound but calls into question the ruling by the court of appeal. I really don't see this as that difficult a ruling and they royally ballsed it up and with consequence
2. The COA decision has encouraged these "ambulance chasing lawyers" to petition for claimants prematurely and to the detriment of the industry and what little reputation it has. That seems "unfair" and something that should be addressed by authorities
3. Car finance and the structuring of deals is still not transparent enough regardless of commission disclosure. As many other posters haven mentioned, there should be a duty of care to better explain these products. To many customers it must seem like a three cup one ball trick.
4. The manufacturers of new cars have a responsibility to structure their distribution networks such that they can be profitable without dealers having to maximise finance product income which is where some of the "sharp" practice emanates from. They have screwed dealer profitability to a point where F&I income is too important.
Overall I think this is the correct outcome but I fully expect the FCA to continue to look closely at the complexity in car purchase transaction when involving credit finance.