THE speed with which the Financial Conduct Authority issued a statement about a possible redress scheme for consumers subject to discretionary commission arrangements, indicates the body is likely to announce a consultation on Monday, 4 August, according to lawyer Jonathan Butler.
Butler, from law firm Geldards and is retained by the Vehicle Remarketing Association, said: “It sounds to me as if [the FCA has] already decided, because it was in six weeks that they were going to announce it, now it’s Monday.”
He added that any claims now would have to meet the same level as that of the Mr Johnson – the case winner.
“The claims that are out there still are for people that can show that there was a discretionary element to the agreements that they entered into and that can align themselves really with the circumstances in which Mr Johnson found himself,” he said.
In Mr Johnson’s case, he was subject to a DCA, the commission was excessively high at 55% of the total finance cost and he was an “unsophisticated” consumer, a legal term used to describe someone who is more vulnerable to mis-selling and needs greater protection.
Speaking on BBC Breakfast, FCA chief executive Nikhil Rathi, indicated that a figure of 50% commission level as a percentage of the total cost of finance would be classed as similar to that of Mr Johnson.
Rathi added that for a consultation to run and a scheme introduced would mean payouts for qualifying individuals were not likely until 2026.
Meanwhile, brokers aren’t quite out of the woods following Friday’s Supreme Court ruling on DCA finance claims, according to lawyer Jonathan Butler.
Butler also warned there was a chance lenders could look at their indemnities in finance supply agreements that enable them to reclaim payouts from anyone selling or leasing cars.
According to retailer publication Auto Sunday, Butler said: “Any lender and dealer worth their respective salt will have put in an agreement, an indemnity. My concern has always been, and I’ve not seen a case yet that’s come to the fore, but I have been asked a couple of times by dealer groups what their potential risk is, but if a lender is on the hook for money in any of these remaining claims, it may well be going back to their dealer agreements and saying, is there an indemnity provision here that we can enforce against the dealer?”
Butler likened the possibility to opening “Pandora’s Box” because of the ramifications this would have on the relationship between the lender and those selling the finance.
However, Butler’s broader view of the Supreme Court ruling was that common sense had prevailed and that far fewer people would qualify for claims than originally estimated.
Tristan Young is an award winning journalist with more than 25 years’ experience reporting on the automotive industry focussing predominantly on fleet and retail. As a self-confessed petrol-head, Tristan has a weakness for car classifieds. When he’s not writing about the automotive industry, he can usually be found outdoors with a small pack of border collies.
