Last month saw a positive result for a JLG client regarding commission on a PCP (Personal Contract Purchase) car finance agreement taken with BMW Financial Services Ltd.

In 2019, the claimant purchased a motor vehicle with the benefit of a PCP agreement with the Defendant (BMW Financial Services Ltd), unaware that the finance company paid a commission of £1,271.70 to the dealer.

Also kept secret from the purchaser of the vehicle was the use, by the car dealership and finance company, of a discretionary commission model, which allowed the dealer to set the interest rate on the loan taken out by the purchaser. And the higher the interest rate charged, the higher the commission the dealership received. The dealership had discretion to slap almost up to a whopping additional 10% interest over the basic rate.

The court adopted the approach taken in the case of Beckett v BMW Financial Services (GB) Limited, in which had he known what the arrangements were and the relationship between the fixing of the interest rate and the payment of commission, he would have acted differently.

Furthermore, the judge found that there were no circumstances in which the ‘sliding scale’ of APR to commission paid would have been disclosed to the claimant, even if he had asked to see it, Mr Slaytor was deemed to be in a hopeless position. He had no reason to ask to see it because he didn’t know it existed, but even if he had asked, he would not have been told.

Under the circumstances, the Court concluded that an unfair relationship had been created due to an extreme inequality of knowledge, as well as breaches of the FCA Handbook (known as CONC) and awarded the client the overpayment of interest at £1,578.10 for the whole of the agreement despite it settling early, plus compensatory interest of £347.18 at 8% and his legal costs.

This represents a fantastic result for those who have been kept in the dark about the commission arrangements put in place when they entered into a PCP agreement to purchase their car.

Whilst the car finance industry continues to deny any wrong doing and refuse to disclose information relating to the arrangements it entered into with dealerships for PCP contracts, this result sends a clear signal to those companies that their actions will have consequences for them and they will eventually be held to account.