The Court of Appeal has unanimously allowed all three appeals, and has upheld all consumer arguments, in a landmark ruling in relation to the mis-selling of Personal Contract Purchase (PCP) finance agreements in the motor finance industry. 18 St John Street’s Victoria Roberts has worked in this area of law since 2019.
Victoria provides a summary of what the Court of Appeal considered:
The Court of Appeal considered the situation where an unsophisticated customer goes into a car dealership to buy a car with the assistance of a finance agreement and is told by the motor dealer that it can get the best option available to them from a panel of lenders. Unbeknown to the customer there is a commission paid to the car dealer by the lender for arranging the finance.
The Court of Appeal determined the following key issues:
In what circumstances would a lender be liable to a consumer for repaying the commission paid where the consumer had not provided their fully informed consent to such?
The Court of Appeal held that the relationship between the consumer and the broker was akin to a fiduciary relationship and lenders must satisfy themselves that customers have provided their fully informed consent to the payment of a commission.
Burying a statement in terms and conditions to the effect that a commission will or may be paid which the consumer is unlikely to read will not be enough to negate the secret nature of a commission payment.
All three lenders in this case owed a duty to provide disinterested advice to customers.
The lenders were held liable for the repayment of commissions to consumers.
On the question of unfairness under s.140A CCA 1974, the fact that the commission was not disclosed to the consumer either fully or partially will not necessarily make the relationship unfair, all facts of each case will be relevant to the court when assessing unfairness including the amount of commission paid.
Victoria Roberts considers that this decision will act as a very important framework decision for County Courts to now follow in this highly litigated area of law which she has been heavily involved in since 2019.
For further details on Victoria Roberts and the services of 18 St John Streets Business & Property Department please contact Chambers Director James Parks or Senior Clerk Katie Brown, Call 0161 278 1800 or email bandp@18sjs.com.