Mis-Selling Car loans Supreme court ruling etc.

I haven't read the full judgement yet, though the indication is right now is that the FCA can now make a ruling based on it.

I was always suspicious of how consumer heavy the ruling was and like many, I put in my paperwork for a refund :D
 
Its noted the FCA can still rule it was unfair.

What im trying to understand, someone can enlighten me, when people had signed these deals they are not forced to and clearly know what they will be paying back. They could have walked away or paid another way.

I note the BBC article says:

he walked into a car dealership, and within an hour was driving away in a car he liked, "very excited".

It wasn't until three years later, when he had paid off the finance on the car, that he realised he still had almost the cash price of the car left to pay."
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How does that even happen?
 
tlrBeta said:
What im trying to understand, someone can enlighten me, when people had signed these deals they are not forced to and clearly know what they will be paying back. They could have walked away or paid another way.
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indeed, out of curiosity scanned these two docs on the remaining discretionary commissions case


2.15 For example, a 1% increase in broker earnings is associated with a 1.3% increase in
customer interest costs under the Reducing DiC model. These effects are significant.
On a typical motor finance agreement of £10,000, increasing commission under
Reducing DiC is typically associated with an increase in interest costs of around
£1,100 over the four-year term of the agreement or an increase of 50% in interest
costs.11 Similar results apply for Increasing DiC. For the Scaled commission model, the
association is smaller and for Flat Fee models it disappears altogether.

Across the firms in our sample (around 60% of the market), we estimate that the
560,000 customers of the firms affected by such commission models could pay in
total £300m more annually in interest costs as a result of the commission models
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to pay an additional £1.1K over four years +£20p/m complex interest on 10K/48mnth loan
looks likre you are doubling the raw interest rate - wouldn't you notice that difference between different dealers.

--------------
LOL
The lower monthly costs associated with PCP were generally promoted as the most
attractive feature for customers when compared to other HP products. However,
it was not always clear that there was sufficient balance between the benefits and
downsides of the various finance options offered or available to customers.
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It's not predominately a pcp issue - I just include that excerpt as there are other areas where customers are 'misled'
 
Penfold101 said:
Some people don’t understand PCP and just see the low monthly payments.


These people are idiots.
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Correct. Unfortunately it seems to law bends to these people, which means people can be less responsible and even more useless.

It's the current perspective.

Banks = bad

If it wasn't for people's own greed they wouldn't get into the mess in the first place, no one forces you to take out car finance or a loan of any kind. People get greedy and are stupid, but let's blame the banks because it shifts all responsibility off themselves.
 
I read one guy's account of this, which ended up in him getting some compensation:

He was 27 when he bought a blue Suzuki Swift in 2017, and did not know the commission had been paid, although the lender said he had signed a document.

Soon after passing his driving test in June of that year he walked into a car dealership, and within an hour was driving away in a car he liked, "very excited".

It wasn't until three years later, when he had paid off the finance on the car, that he realised he still had almost the cash price of the car left to pay.
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Sorry mate, that is NOTHING to do with the interest rate you were charged. His description sounds more like a PCP (the last bit seems incorrectly worded TBH).

Now, I am not saying some were sold higher rates than they should have been (I put this in another thread which I will quote in a second but, in the case above, it sounds more like he didn't educate himself on the type of agreement.


From other thread:

Richie said:
The issue with the Car Finance side is that the interest rates were not decided on the customer's personal circumstances (unless they went Sub-Prime).

The finance companies provided agreements to the car dealers and gave them a range of finance rates that they would allow the dealer to charge out at. For example:

Base Rate of 4% and upto 10%
  • The dealer can now apply an interest rate of between 4% and 10% (and under if they wanted to - see next point)
  • If the dealer charged out at under 4% (base rate) then the dealer would have a subsidy applied i.e. they would have to pay the finance company to go with that rate
  • If the dealer charged at base rate, the finance company would pay the dealer a nominal fee
  • If the dealer charged over base rate then the finance company would pay the dealer commission. This commission was based on the rate applied and the amount of finance e.g. £8000 borrowed at 8% would get more commission than £8000 at 6%

The issue is that the interest rate had NOTHING to do with the customer's credit profile and risk. The dealer essentially set the rate as high as they could get the customer to agree on a payment. Example - If a customer said £300 is too much, they would lower the rate a little until the customer said "ok, £260 I can do".

This is where the mis-selling was being done. Had the interest rate been set based on a proper credit and risk review of the customer, they it would be different but it was simply being set at whatever monthly payment the dealer could get away with in order to inflate their commission from the finance companies.

Sub-Prime business tends to be a little different as the Sub-Prime finance company tend to decide the rate based on a proper credit check and risk report. If a customer is deemed a high risk of default, then the interest rate increases. This is to protect the lender as they essentially get back more of the capital loaned out by the time the customer potentially defaults.
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So what happens now ? I have one claim open with bluemotor finance and one with black horse that I took out a fair good years ago...when I done the initial email from the money saving expert site they came back to me saying I did have DCA .

My latest car I purchase outright


So with this ruling yesterday what happens? Do I need to do anything ? Will I get anything ?.
 
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tlrBeta said:
What im trying to understand, someone can enlighten me, when people had signed these deals they are not forced to and clearly know what they will be paying back. They could have walked away or paid another way.

How does that even happen?
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Both my daughters work for a major bank with one of them being a bit up the ladder now.
The department deals with people who can't pay but one of the main things they do is ring people up after 20 years and say something like "Just letting you know, you signed a 25 year deal and up to this point you have only been paying the interest. If you continue like this you will still owe us £xxx which was the original price of the property".
You'll be gobsmacked how many people sign up for this, forget they are only paying the interest and then agree a new payment plan if they can afford.
One of my closest friends took it to the wire and was very close to losing his house when his Mum finally died at 97 and by the time his mortgage was up he'd got the original house price to pay.
We were on an interest only mortgage but we also paid a type of insurance at the same time.
I know it's not about Car Finance but similar where people don't know what they are doing.
 
DJMK4 said:
So what do I need to do ? Nothing and wait ?
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I'd start off by reading one of the many threads on the topic, then using your brain to try and understand what to do. Perhaps use an online search engine to get more info if you need.
 
no skin in the game but according to martin lewis on the news earlier,
if you have a claim or multiple being processes you do nothing just sit on your hands. the companies will get in touch when they have worked out the liability.
if you have a claim and its logged via a no win no fee company again do nothing but you run the risk of losing a large percentage of any possible payout to them.

so basically do diddly squat and wait for the finance company they will know who you are.
 
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FCA have now published what is gonna happen.

FCA to consult on a compensation scheme for motor finance customers

We will consult on an industry-wide scheme to compensate motor finance customers who were treated unfairly.
www.fca.org.uk www.fca.org.uk

They believe the remedy they will put in place will cost between £9bn and £18bn, the midpoint is their actual estimate, when you take into account administration costs.

The payouts will be all commission (including DCA) plus around an average 3% interest rate.

For those not using CMCs, they can expect to receive on average £950 per contract. They also expect lenders to actively tell people that borrowed as well, so take up should high. It covers everything from 2007 to 2021.
 
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