Major car finance scandal update with firms told to prepare to ‘foot bill’

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Car finance firms have been told to “foot the bill” amid a big update to drivers over the ongoing scandal. New research from Consumer Voice asked 2,050 people who had car finance loans arranged by their dealer whether they were made aware of key information that could affect their borrowing decision.

Four in 10 people who took out a loan in the past four years didn’t know whether their dealer received commission for arranging their finance deal – and only five in 100 said they were sure no commission was paid.

Most people are not told about commission arrangements ahead of signing a deal – only 28% said they agreed to commission before signing a deal. Of these, over half (56%) said they had to ask for this information.

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These more savvy customers tend to be better educated, and are more familiar with buying and using financial products. Only a third (34%) said the information was volunteered by the dealer.

Alex Neill, co-founder of Consumer Voice, said: ‘Consumers have a right to expect car dealers to act as honest brokers. People trust their car dealer to act in their best interests when arranging finance.

‘Yet, this trust is clearly being abused by some dealers in the market. It is the responsibility of the dealer to ensure that car buyers both know of and agree to a commission payment.

‘And being transparent and upfront about commission payments doesn’t include it being buried in the fine print of a raft of documents the consumer has no chance of reading.’

A Court of Appeal ruling in October made it clear it is unlawful for car dealers to gain commission from lenders without receiving the customer’s fully informed consent to the payment.

This decision could open the door to a fresh wave of complaints from motorists seeking compensation for mis-sold car finance in previous years.