I anticipate that the courts will start to get even more clogged up by cases involving consumers who were not provided with adequate disclosure in relation to commissions when they received motor finance.
The Financial Conduct Authority (FCA) is already engaging in dialogue with the motor industry in relation to additional time being provided to deal with complaints. Lawyers are claiming that any further delay will result in further consumer detriment.
In Johnson v Firstrand Bank Ltd, Wrench v Firstrand Bank Ltd and Hopcraft v Close Brothers, the Court of Appeal found in favour of all three claimants, allowing their appeals. All three claims had previously failed in the County Court and their appeals were fast tracked and grouped together in the Court of Appeal.
The basic preface is that consumers will have expected a car dealer to make a profit from the sale of a motor vehicle but not, unless there was disclosure, from any associated financing arrangement.
This was contrary to FCA rules which became effective from 28 January 2021 banning discretionary commission payments.
In Hopcraft, there was no dispute that the commission was kept secret from the Claimant.
In Wrench and Johnson, there was no direct communication about commissions payable to the motor dealer, but it was referenced in the small print of the lender’s standard terms and conditions.
The referencing of the commission was deemed to be insufficient as the lender was still liable as an accessory to the brokers breach of duty. The Court of Appeal found that the motor dealers owed fiduciary duties and without informed consent from the consumers, were all held liable.
In order to avoid another PPI-style rush of claims, I anticipate that the FCA will intervene and allow motor dealers and/or motor finance lenders; to deal with the record number of complaints they are now likely to receive. There is also the prospect of an appeal to the Supreme Court.
Should you require any additional information regarding motor finance claims (whether pursuing or defending), please do not hesitate to contact Mr Bill Dhariwal on DDI: 01489 864 117 or E: bill.dhariwal@lawcomm.co.uk
