Landmark legal case finds against car dealers who are warned that they must put customer interests before their own
Caption: Drivers were paid more for cars than they realised because of hidden commission fees on the finance deals. Photo: David Zalubowski/ APcompanies providing car financeAppeal Court judges ruled in favour of three car buyers who had claimed that hidden commissions on their deals added thousands of pounds to the cost.They said consumers have the right to know about the commission arrangements between the lender and car dealer to ensure fairness.
Lawyers for the customers bringing the case – student nurse Amy Hopcraft, factory supervisor Marcus Johnson and postal worker Andrew Wrench – argued that dealers had owed them a duty to provide impartial information or advice.The court agreed that the car dealers were the sellers but also acted as credit brokers on behalf of the buyers. As such they had a duty to search for and offer a finance deal that was competitive and suitable for the customers’ needs.
The FCA has been reviewing historical cases since January. It has warned lenders to prepare for additional costs as part of a possible compensation scheme.
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