Dealers are being warned not to be taken in by ‘scare tactic’ threats of court action over claims for finance commission.
It follows the Financial Conduct Authority’s review of auto finance discretionary commission models as well as consumer credit commission disclosure, which prompted a ‘no win, no fee’ campaign by solicitors and claims management companies alleging misselling.
Motor trade legal experts Lawgistics warned in February that the campaign against dealers was being stepped up, and the consultancy says dealers are getting requests for masses of documentation, as well as confirmation of the amount of commission earned on finance deals.
Legal adviser John McDougall says in the latest update from Lawgistics that the firm has successfully replied to the letters without them turning into a formal claim or anything having to be paid out by dealers.
But he adds that it has also received two court claims from members who hadn’t initially got back to the solicitor or claims management firm, which had resulted in them being hit with a claim for money.
Both of them had two defendants – the dealer and lender – which Lawgistics said suggested that the lender hadn’t come up with the information either.
A separate case involving a lender (ie, not a Lawgistics member) had actually made it through court, and McDougall said some solicitors were now using that as a ‘scare tactic’ to try to get dealers to shell out compensation and avoid court.
But because it was a county court case, that didn’t actually set a legal precedent.
‘Therefore, any other cases are distinguishable, which effectively means you can still provide reasons to affect the decision of a case that is under consideration differently from a similar case that is referred to as a precedent,’ he said.
‘Until a precedent is set, these cases will be dealt with on an individual basis and our advice is that if you do not want a court case on your hands, make sure such issues are dealt with in a timely manner.’
McDougall urged members to send any letters over immediately so Lawgistics could deal with them to ‘keep the wolves at bay’.
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