News

Misselling of car finance is ‘next PPI scandal’ as commission questioned

Time 1 year ago

Ambulance chasing lawyers are using the alleged non disclosure of finance commission as a way to target car dealers in what is billed as ‘the next PPI scandal’.

Nona Bowkis, legal advisor at Lawgistics, told Car Dealer Live today that they have received a number of letters about commission on car finance not being disclosed to customers.

Dealers are being sent legal letters questioning whether they clearly told customers that they would be receiving a commission from finance providers at the point of sale.

Advert

Solicitors are also questioning whether salespeople advised their customers to choose a particular finance provider knowing they would make more money from the deal.

Law firms are circling car dealers in the hope of claiming compensation for customers and have been sending letters out threatening legal action.

Experts at Lawgistics have warned this could cause serious problems for car dealers as they’re forced to fight individual cases.

Bowkis 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?’

She added: ‘I’ve got one now where the customer was refused Santander and MotoNovo, and he’s gone somewhere else subprime.

‘Now they’re [his solicitors] are saying that they must have got a higher commission and that’s why they chose to give the customer that deal. No – it was because they got refused by the other two and they wanted the car. But that’s the sort of things they’re looking at.

‘They want to know: Did you tell that customer to get that deal because it was better for you as a dealer?’

Bowkis told James Baggott on Car Dealer Live that the obligation falls with the dealer who sold the finance and therefore they will be responsible for compensation.

Jason Williams, a former trading standards officer who now works for Lawgistics, also appeared on the show, and said that how much compensation car dealers would be liable for is still unknown.

He said: ‘They’re presumably going to have to compensate the consumer somehow but how is that gauged?


‘I think it’ll be huge. I think it’ll be as big as PPI. It’s very easy to say to someone “I wasn’t told the commission for this, that and the other. I was missold”.

‘I can see it being very easy for the ambulance chasers to latch on to. I can see it mushrooming into something quite substantial.’

Williams is currently working on a case that happened in February this year, while Bowkis has one from a car sold in January. Both car dealers received letters from solicitors.

She added: ‘That’s how quickly they’re moving. We’re used to PPI, we had PPI cases from 22 years ago. These are all quite new deals. There’s nothing historical, it’s happening right now.’

Get more from Car Dealer

  • Premium stories
  • Used car data
  • Magazine early access

So far there are no results so the success of dealers in these cases is unknown, however Bowkis said: ‘Dealers should be talking to their compliance companies to make sure they’ve got it right, but once there’s a complaint we can certainly look at it.’

Watch the full episode of Car Dealer Live with other advice for car dealers below

Click here for the full collection of Car Dealer Live interviews

Rebecca Chaplin's avatar

Rebecca has been a motoring and business journalist since 2014, previously writing and presenting for titles such as the Press Association, Auto Express and Car Buyer. She has worked in many roles for Car Dealer Magazine’s publisher Blackball Media including head of editorial.

More stories...

Advert
Server 51