7:35 am, May 3, 2023
Ambulance-chasing solicitors who have been targeting car dealers over mis-sold finance are now backing off.
Motor trade legal experts Lawgistics has reported several law firms have recently stood down claims they had made against car dealers.
The legal firm has spotted a trend among solicitors who tried their luck by sending car dealers threatening letters over car finance mis-selling but have since pulled out as they fear they won’t win.
Car dealers have faced an influx of legal letters in the past two years claiming that the finance commission a dealer earned from a car sale had not been disclosed properly.
From January 2021, car dealers have had to make clear how much commission they’ll earn from a finance deal.
This includes commission, if they’ll be paid a fee for setting the finance up or any other form of remuneration they may benefit from as a result.
Joel Combes, managing director of Lawgistics, said: ‘We have had a number of these solicitors backing out of cases or “dropping hands” as it’s called. This means that they will be dropping the case with no one liable for costs.
‘This says to me that they’re just not confident they would win. We are seeing more and more of these cases going away.’
Hundreds of car dealers have received similar letters from solicitors who have been chasing these cases. Combes said they had been ‘looking for the next PPI scandal’.
‘We’ve seen hundreds of letters sent to our dealers,’ he said.
‘We have a standard response and are seeing more and more of these cases now go away.
‘The problem was, some dealers paid out and settled these claims and that fuelled the fire and gave the solicitors something to chase.’
Combes advised car dealers not to ignore any letters they receive about finance mis-selling, though, as they still need to be contested.
He told Car Dealer: ‘These absolutely need to be tackled and not ignored. But dealers also shouldn’t just pay out, as this can encourage them to target the motor trade further.
‘Our advice would be simple: Get some advice from professionals.’
The trend first started to emerge in the spring of 2020, according to Lawgistics solicitor Nona Bowkis.
During a Car Dealer Live interview at the time, she said: ‘What they’re looking for is the written element. Have you put it in the paperwork that there is a commission element of that finance agreement?
‘Although it’s obvious to everybody, unless it’s in the paperwork, that gives the ambulance-chasers a chance to have a look at that. What they’re also questioning is around the DiC [Difference in Charges] commission and asking why did you give your customer that deal?’
You can watch what she said in that interview in the video above.
