November 26, 2024 • 14 mins
On this personal finance edition of Merryn Talks Money, host Merryn Somserset Webb is joined by Bloomberg reporters Harry Wilson and Eleanor Thornber to discuss the brewing crisis in Britain’s car finance industry.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:03):
Bloomberg Audio Studios, Podcasts, radio news. Hey it's Maren here.
Just a reminder before we get started. I've launched a
weekly Merin Talks Money newsletter. It is the place the
only place to get your micro to macro thoughts on
your money and your investments. It hits inboxes on Saturday
(00:23):
mornings for Bloomberg subscribers only, So be sure to sign
up at Bloomberg dot com slash Merrennewsletter or check out
the link in the show notes below. Welcome to Meron
Talks Your Money, the personal finance edision of Meron Talks Money.
(00:46):
In these bonus podcasts, we talk about the best strategyde
for making the most of your money. I'm Merrin su
Stetweb and with me this week senior reporter Harry Wilson
and reporter Eleanor Thornberg, replacing John Steppeck, who was away
this week outrageously because I'd love to talk to him
about this particular subject. We are talking this week about
car commission payments. British car dealers very often don't just
(01:08):
sell you cars, they arrange the loans that allow you
to buy them. Historically, those loans have looked relatively competitive
if you've gone in to buy a car, you've chosen
your car, you've sat down with the dealer, he's offered
you a loan, you've assumed it's a fixed price, you've
taken it. What we're now learning, thanks to an FCO
investigation which started in January, is that those prices were
(01:29):
not fixed. They included hidden commissions about forty percent of
the time, commissions that use the buyer knew nothing about,
and it turns out that that is not legal. Carry
tell us what's happened here.
Speaker 2 (01:42):
What you've got is a change in the UK car
buying market over the last couple of decades, and out
of recently. Essentially most people buy a car that're taking
out some kind of financing. So the larger part of
car for finance purchases these days are going to be
with a thing called a personal contract.
Speaker 1 (01:59):
Plan, the ones right where you pay you pay a
monthly fee or a monthly payment and then at the
end there's a balloon payment and you can choose or
not choose to pay that balloon payment and take full
ownership of the car.
Speaker 2 (02:09):
Correct, So what you're doing with a PCP contract is
paying the depreciation on the car effectively. So what you've
got as agreement between you and the dealer to essentially
finance the value of the car as it starts and
what they reckon it will be at the end of it,
and that then chops up into thirty six or monthly
payments normally, So pretty uncontroversial. That's that's the way most
(02:32):
people have been buying cars now for more probably more
than a decade. And it's also the way that most
car manufacturers car dealers make a lot of their money too,
is they're not essentially selling your car, they're selling your
financing product when you go in there.
Speaker 1 (02:45):
So what's a difference between that and higher purchase HP,
because that's included as well, right, So.
Speaker 2 (02:49):
Higher purchase is more expensive in terms of your monthly payments,
so you're a difference maybe several hundred pounds in what
you have to page month. PCP is cheaper, but at
the end of it, you will have a larger payment
to buy the vehicle at the end, So high purchase
is going to be a formality. PCP is probably going
to be something in order of several thousand pounds to
(03:10):
actually own the car at the end. And the reality
is most people at the end of a PCP contract,
probably won't actually buy the car. They'll roll over the deal.
The car dealer will say that they've got something like
equity in their car, so they'll then take out to
buy a new car, take out a new PCP plan,
and the sort of the cycle continue.
Speaker 1 (03:27):
Like maybe a mortgage been autor just paying for that duty.
So you know, from your point of view as a customer,
you see an interest rate, maybe it's four percent, five percent,
looks kind of fine, you pay you maybe, I mean,
this is this is in their years running up to
twenty twenty one, is what we're talking about. These kind
of deals were made illegal in twenty twenty one. So
before that, you got off of a prize, you could
afford the price, you paid the price, you've got the car.
(03:49):
Where's the problem?
Speaker 3 (03:50):
You just essentially didn't know that some of the money,
some of the payments that you were making were actually
to the lenders benefit and not necessarily for the car
that you're paying for. So the commissions are said actually
created perverse incentives all the lenders themselves, which you weren't
aware of.
Speaker 1 (04:03):
Yeah, the thing here is that the interest rate is
effectively discretionary. Yeah, so it's called it a DCA discretion
discretionary commission payment. So you could conceivably, if this car
salesman wasn't in the way of your deal, you could
possibly have got a rate of say two and a
half percent or three percent. But because he's in the way, Yeah,
adding his bit on told up, maybe you've paid five
percent or six percent. And that's the problem. You didn't
(04:26):
know what it was exactly.
Speaker 2 (04:27):
Okay.
Speaker 1 (04:28):
Now, when the FCA originally started to look at this,
their main concern was exactly that was these commission payments,
was the idea that there was a discretionary commission in
there and people didn't know about it. But now the
most recent court case, almost recent ruling has widened this
out right to any kind of commission payment that you
didn't know about. So there are other types of commission
(04:49):
payment in here as well.
Speaker 3 (04:50):
Can you tell us, yes, a non discretionary which is
kind of where the officer where the customer is told
that there is going to be commissioned, or the payments
that they make. But yeah, as you say, the court
case kind of up so kind of any commission that
is paid has now been made like unlawful behavior.
Speaker 1 (05:05):
So flat fee is paid by finance companies to the
does bring all franks.
Speaker 3 (05:09):
Yeah, so if you're Barclays and you pay the commission
to the lender, you are inherently involved because you've played
a part in paying that commission, which is now illegal.
Speaker 1 (05:17):
Okay, So we'll come on to this being horrible for
the banks because they must be signally going, oh lord,
here we go again, because I remember the PPI scandal
and the billions and billions they had to pay out then.
But for a consumer now here you are, You've got
your car, your car might even be paid off at
this point, and suddenly somebody's saying to you, do you
know what? You could get a pile of cash out
of this. How do you go about doing that?
Speaker 3 (05:39):
Well, you'd have to make a claim by the Financial
Oddmusman Service, And the kind of actions of the FAA
are certainly encouraging off people to do that. As you say,
they've opened up to not just kind of any kind
of form of commission. So it actually be quite straightforward.
I mean, it just depends on how many people decide
to do that, I suppose, but it is quite a
straightforward procedure. You just make a complaint and see how
much money you're entitled to. I think it depends on
where exactly you start to the car finance.
Speaker 1 (06:00):
Yeah, I'm the first thing to do is to find
out whether you've actually had this discretionary commission in your deal,
because obviously, because you won't talked about it exactly, you
don't know if you've got it or not. So the
first thing, presumably is to go to your car finance
company and say is this in there? So you need
to write a letter to them, and there are template
letters you can use. Money Saving Expert has one, which
(06:22):
has one, you can find others on the internet. So
the first thing to do, I would guess, is to
use it a template to find out whether you actually
might be owed any money or not. And I think
it's about forty percent of car finance deals did have
this discretionary commission in it. So that's the first step, right, yes,
And then then you.
Speaker 3 (06:40):
Wait, yes, wait and see with fingers crossed.
Speaker 1 (06:43):
And we know the timeframe.
Speaker 3 (06:45):
It's not clear as you say, it's a straightforward procedure,
so it could suddenly amass all at once and that
might clog things up. But if you know the banks
on the lenders are expecting it, it may well not
take long at all.
Speaker 1 (06:55):
Yeah, I'm I think that the period in which the
banks or finances can respond has been taken out to
the end of the next year. Yes, a lot of
widens the window even more exactly, so you've got a
long time to do it. But on the other hand,
you might as well get started because we don't know
how this this stuff is going to move. And I
think the FCAS there are already twenty thousand complaints or
so open, so there's a lot more complaints to come.
(07:18):
And if there is this huge volume and they decided
to go with both discretionary and a discretional interest in
other types of commission, you're talking potentially hundreds and hundreds
of thousands of claims. So, you know, exciting times for consumers.
I mean, Harry, you probably remember, as I do, the
PPI payments and it came out to the fifty billion
or some was a genuine boost to the consumer economy,
(07:40):
and they said there's anything that Rachel Rice could do
with right now would be a fifty billion booth from
the banks into the consumer economy.
Speaker 2 (07:47):
Yeah, I mean, it's crazy when you think back. I
think it was around about twenty ten twenty eleven, one
of the big US investment banks came out with its
worst case scenario for PPI and it said something in
a reader of about three point twenty five three point
five billion pounds of claims was the worst case, and
this was seen as crazy at the time. And some
months after that Lloyd's actually made a three point five
billion pound provision, which again was seen as way over
(08:09):
the top. It's never going to need all that money.
What was they doing? Well, when Lloyd's got to about
thirty billion, I think most people realized that the three
point five was, if anything, a massive underrestment. So the
question for the industry really at the moment is are
we looking at something here that could balloon into a
PPI site situation? Are the numbers at the moment actually
relatively small fry compared to what potentially could be paid
(08:30):
out here?
Speaker 1 (08:31):
So Ragiraries must be you know, licking her lips.
Speaker 2 (08:33):
Well, yes, I mean there is some quite serious academic
money going from the banks.
Speaker 1 (08:37):
Yeah.
Speaker 2 (08:38):
Well, this thing is that it is genuinely stimulative because
this is relatively small amounts of money, you know, a
few thousand pounds here, and it tends to be money
that people aren't going to put into a saving scout.
It's money that gets immediately recycled into economy. You know,
people buy a new TV or something like that. So
there could be a short term sugar rush if there is,
you know, if this does turn into a mini or
(08:58):
even a major PPI type situation.
Speaker 1 (09:01):
But there was a suggestion from Moodius the other day
there will come out of the thirty billion US so,
as you said, isn't it billion? That really is real money.
And of course last time a lot of the PPI
money was recycled into cars. Do you remember that.
Speaker 2 (09:12):
Yeah, yeah, so look out life comes with so it's possible,
you know, this money goes straight back into the pockets
of the car companies through people buying new cars.
Speaker 1 (09:22):
That like PPI. When it's a sort of mass redress system, right,
everyone gets there's a fairly standard payment system. It's really
very efficient way to get money into the pockets of
ordinary people. It's like another people's Q.
Speaker 2 (09:34):
Quite. The only thing I suppose banks would question would
be to say, well that's all great, but then that
puts our cost of capital. We are seen as increasingly uninvestable.
Therefore we need to now pass that on in terms
of higher costs across the board in terms of all
our products. So yes, everyone sees a or at least
those who bought these products will get the money. What
you might see though, over the time, is a gradual
(09:56):
increase in the costs of a range of financial products,
which generally it won't be good for anyone. But you
know that's a longer term problem, and in the here
and now, you know a few thousand pounds would be
quite nice to a lot of people.
Speaker 1 (10:07):
Definitely, do you have any sense at all of it
when you say a few thousand pounds of exactly how
this might work. I mean, the only thing I've seen
is one a couple of the rulings so far, it
looks like there's about two percentage points in it in
terms of the discretionary commission. And then the FS insisted
on one of those cases that went through that the
difference was paid back, but with an interest rate of
eight percent on that gap.
Speaker 2 (10:26):
Yeah, so eight percentage is the standard rate that you
often get applied in these types of cases. At the moment,
it's all a bit up in the air because we've
just had these court rulings. So everything is really hinting
on now the appeals, and which is why the FCA
itself has actually issued a notice to all of the
different players in this, all the car finance companies, to
say there's a moratorium and moments one claims pending the
(10:50):
outcome of these legal cases. But after that, and I
guess we're really waiting to see if the Supreme Court
will take up the case. I think the expectation is
the Supreme Court will take up the case and probably
take it up pretty quickly, and then once we've got
a ruling there, then you have a far better idea
of how this is all going to play out and
what people might reasonably expect. But obviously anyone telling it
at the moment exactly what you can get can't be
(11:10):
telling the truth because no one knows until the course of.
Speaker 1 (11:13):
Rule in this well, that takes us neatly to the
assumption that there's going to be a big pal of
scams around this in the same way that they were
around PPI amoralty that will be totally legitimate claims companies
that will be suggesting that they help you with your
claim right eleanor that that's going to happen just like
it did last time. Yes, in theory.
Speaker 3 (11:31):
Yes, when I was speaking to people about it last week,
they were kind of saying you might also get lawyers
who jump on it as well, the kind of ambulance
chasers who will kind of make money and profit off
of people being on search amount whether or not going
to have a claim and if they can take it
to court.
Speaker 1 (11:43):
So yeah, I'm sure there will be. Well, you can
already see those on social media. They're already out there saying,
you know, you can claim going back twenty years etc.
On your car finance. But as we've discussed as a
much easier way to do it, you don't have to
use a claimed company. You simply use one of the
template letters they are exelcted you very much. Look out
for the difference between a legitimateclaims company, which again we
don't suggest to use, and a scam. And if you
(12:06):
do use a logist mcclaims company, you will find that
you'll be giving part of your compensation away to them,
which you don't really want to be doing either. No,
definitely not.
Speaker 2 (12:14):
There's also an interesting question here for the car industry.
There obviously the lights of VW aren't doing so well,
at the moment factory closures. Now you see that potentially
VW's own financing arm could obviously be among those companies
are going to have to pay out compensation costs to
people who've been sold these products over decades. So it's
(12:34):
probably just another issue for the car manufacturers already struggling
with evs, already struggling with cost of living crisis, all
of these kind of things, and it's just another problem
for them which is probably very unwelcome.
Speaker 1 (12:46):
Interestingly, there was an article on the newspaper the other day,
and I can't remember who wrote it. I just noticed
the headline and it said that the headline basically said
you shouldn't be claiming compensation for this, don't be greedy,
And I thought, well, that's not quite right, is it,
because who's been greedy already? Well? Quiet, thank commission takeers.
So I think the only thing that I would have
to add that is that I can't think of another
country anywhere. It must be only in the UK where
(13:08):
a massive miss selling scandal is actually a positive, because
in my health, our consumers out we will see, we
will see. Thank you both very very much, indeed, thanks
for listening to this week's Maren Talk to Your Money.
If you like our show, rate review, and subscribe wherever
you listen to podcasts. Also be sure to follow me
(13:29):
and John on ex or Twitter. I am at Maren
sw and John is John Underscore Stepping. This episode was
produced by some Asidi production support and sound designed by
Moses and Questions and comments on this show and all
our shows are always welcome. Our show email is merin
Money at Bloomberg dot net, and of course thank you
to Harry and Elanov joining us today and giving us
(13:50):
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(14:14):
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ad free.
Bloomberg Audio Studios, Podcasts, radio news. Hey it's Maren here.
Just a reminder before we get started. I've launched a
weekly Merin Talks Money newsletter. It is the place the
only place to get your micro to macro thoughts on
your money and your investments. It hits inboxes on Saturday
(00:23):
mornings for Bloomberg subscribers only, So be sure to sign
up at Bloomberg dot com slash Merrennewsletter or check out
the link in the show notes below. Welcome to Meron
Talks Your Money, the personal finance edision of Meron Talks Money.
(00:46):
In these bonus podcasts, we talk about the best strategyde
for making the most of your money. I'm Merrin su
Stetweb and with me this week senior reporter Harry Wilson
and reporter Eleanor Thornberg, replacing John Steppeck, who was away
this week outrageously because I'd love to talk to him
about this particular subject. We are talking this week about
car commission payments. British car dealers very often don't just
(01:08):
sell you cars, they arrange the loans that allow you
to buy them. Historically, those loans have looked relatively competitive
if you've gone in to buy a car, you've chosen
your car, you've sat down with the dealer, he's offered
you a loan, you've assumed it's a fixed price, you've
taken it. What we're now learning, thanks to an FCO
investigation which started in January, is that those prices were
(01:29):
not fixed. They included hidden commissions about forty percent of
the time, commissions that use the buyer knew nothing about,
and it turns out that that is not legal. Carry
tell us what's happened here.
Speaker 2 (01:42):
What you've got is a change in the UK car
buying market over the last couple of decades, and out
of recently. Essentially most people buy a car that're taking
out some kind of financing. So the larger part of
car for finance purchases these days are going to be
with a thing called a personal contract.
Speaker 1 (01:59):
Plan, the ones right where you pay you pay a
monthly fee or a monthly payment and then at the
end there's a balloon payment and you can choose or
not choose to pay that balloon payment and take full
ownership of the car.
Speaker 2 (02:09):
Correct, So what you're doing with a PCP contract is
paying the depreciation on the car effectively. So what you've
got as agreement between you and the dealer to essentially
finance the value of the car as it starts and
what they reckon it will be at the end of it,
and that then chops up into thirty six or monthly
payments normally, So pretty uncontroversial. That's that's the way most
(02:32):
people have been buying cars now for more probably more
than a decade. And it's also the way that most
car manufacturers car dealers make a lot of their money too,
is they're not essentially selling your car, they're selling your
financing product when you go in there.
Speaker 1 (02:45):
So what's a difference between that and higher purchase HP,
because that's included as well, right, So.
Speaker 2 (02:49):
Higher purchase is more expensive in terms of your monthly payments,
so you're a difference maybe several hundred pounds in what
you have to page month. PCP is cheaper, but at
the end of it, you will have a larger payment
to buy the vehicle at the end, So high purchase
is going to be a formality. PCP is probably going
to be something in order of several thousand pounds to
(03:10):
actually own the car at the end. And the reality
is most people at the end of a PCP contract,
probably won't actually buy the car. They'll roll over the deal.
The car dealer will say that they've got something like
equity in their car, so they'll then take out to
buy a new car, take out a new PCP plan,
and the sort of the cycle continue.
Speaker 1 (03:27):
Like maybe a mortgage been autor just paying for that duty.
So you know, from your point of view as a customer,
you see an interest rate, maybe it's four percent, five percent,
looks kind of fine, you pay you maybe, I mean,
this is this is in their years running up to
twenty twenty one, is what we're talking about. These kind
of deals were made illegal in twenty twenty one. So
before that, you got off of a prize, you could
afford the price, you paid the price, you've got the car.
(03:49):
Where's the problem?
Speaker 3 (03:50):
You just essentially didn't know that some of the money,
some of the payments that you were making were actually
to the lenders benefit and not necessarily for the car
that you're paying for. So the commissions are said actually
created perverse incentives all the lenders themselves, which you weren't
aware of.
Speaker 1 (04:03):
Yeah, the thing here is that the interest rate is
effectively discretionary. Yeah, so it's called it a DCA discretion
discretionary commission payment. So you could conceivably, if this car
salesman wasn't in the way of your deal, you could
possibly have got a rate of say two and a
half percent or three percent. But because he's in the way, Yeah,
adding his bit on told up, maybe you've paid five
percent or six percent. And that's the problem. You didn't
(04:26):
know what it was exactly.
Speaker 2 (04:27):
Okay.
Speaker 1 (04:28):
Now, when the FCA originally started to look at this,
their main concern was exactly that was these commission payments,
was the idea that there was a discretionary commission in
there and people didn't know about it. But now the
most recent court case, almost recent ruling has widened this
out right to any kind of commission payment that you
didn't know about. So there are other types of commission
(04:49):
payment in here as well.
Speaker 3 (04:50):
Can you tell us, yes, a non discretionary which is
kind of where the officer where the customer is told
that there is going to be commissioned, or the payments
that they make. But yeah, as you say, the court
case kind of up so kind of any commission that
is paid has now been made like unlawful behavior.
Speaker 1 (05:05):
So flat fee is paid by finance companies to the
does bring all franks.
Speaker 3 (05:09):
Yeah, so if you're Barclays and you pay the commission
to the lender, you are inherently involved because you've played
a part in paying that commission, which is now illegal.
Speaker 1 (05:17):
Okay, So we'll come on to this being horrible for
the banks because they must be signally going, oh lord,
here we go again, because I remember the PPI scandal
and the billions and billions they had to pay out then.
But for a consumer now here you are, You've got
your car, your car might even be paid off at
this point, and suddenly somebody's saying to you, do you
know what? You could get a pile of cash out
of this. How do you go about doing that?
Speaker 3 (05:39):
Well, you'd have to make a claim by the Financial
Oddmusman Service, And the kind of actions of the FAA
are certainly encouraging off people to do that. As you say,
they've opened up to not just kind of any kind
of form of commission. So it actually be quite straightforward.
I mean, it just depends on how many people decide
to do that, I suppose, but it is quite a
straightforward procedure. You just make a complaint and see how
much money you're entitled to. I think it depends on
where exactly you start to the car finance.
Speaker 1 (06:00):
Yeah, I'm the first thing to do is to find
out whether you've actually had this discretionary commission in your deal,
because obviously, because you won't talked about it exactly, you
don't know if you've got it or not. So the
first thing, presumably is to go to your car finance
company and say is this in there? So you need
to write a letter to them, and there are template
letters you can use. Money Saving Expert has one, which
(06:22):
has one, you can find others on the internet. So
the first thing to do, I would guess, is to
use it a template to find out whether you actually
might be owed any money or not. And I think
it's about forty percent of car finance deals did have
this discretionary commission in it. So that's the first step, right, yes,
And then then you.
Speaker 3 (06:40):
Wait, yes, wait and see with fingers crossed.
Speaker 1 (06:43):
And we know the timeframe.
Speaker 3 (06:45):
It's not clear as you say, it's a straightforward procedure,
so it could suddenly amass all at once and that
might clog things up. But if you know the banks
on the lenders are expecting it, it may well not
take long at all.
Speaker 1 (06:55):
Yeah, I'm I think that the period in which the
banks or finances can respond has been taken out to
the end of the next year. Yes, a lot of
widens the window even more exactly, so you've got a
long time to do it. But on the other hand,
you might as well get started because we don't know
how this this stuff is going to move. And I
think the FCAS there are already twenty thousand complaints or
so open, so there's a lot more complaints to come.
(07:18):
And if there is this huge volume and they decided
to go with both discretionary and a discretional interest in
other types of commission, you're talking potentially hundreds and hundreds
of thousands of claims. So, you know, exciting times for consumers.
I mean, Harry, you probably remember, as I do, the
PPI payments and it came out to the fifty billion
or some was a genuine boost to the consumer economy,
(07:40):
and they said there's anything that Rachel Rice could do
with right now would be a fifty billion booth from
the banks into the consumer economy.
Speaker 2 (07:47):
Yeah, I mean, it's crazy when you think back. I
think it was around about twenty ten twenty eleven, one
of the big US investment banks came out with its
worst case scenario for PPI and it said something in
a reader of about three point twenty five three point
five billion pounds of claims was the worst case, and
this was seen as crazy at the time. And some
months after that Lloyd's actually made a three point five
billion pound provision, which again was seen as way over
(08:09):
the top. It's never going to need all that money.
What was they doing? Well, when Lloyd's got to about
thirty billion, I think most people realized that the three
point five was, if anything, a massive underrestment. So the
question for the industry really at the moment is are
we looking at something here that could balloon into a
PPI site situation? Are the numbers at the moment actually
relatively small fry compared to what potentially could be paid
(08:30):
out here?
Speaker 1 (08:31):
So Ragiraries must be you know, licking her lips.
Speaker 2 (08:33):
Well, yes, I mean there is some quite serious academic
money going from the banks.
Speaker 1 (08:37):
Yeah.
Speaker 2 (08:38):
Well, this thing is that it is genuinely stimulative because
this is relatively small amounts of money, you know, a
few thousand pounds here, and it tends to be money
that people aren't going to put into a saving scout.
It's money that gets immediately recycled into economy. You know,
people buy a new TV or something like that. So
there could be a short term sugar rush if there is,
you know, if this does turn into a mini or
(08:58):
even a major PPI type situation.
Speaker 1 (09:01):
But there was a suggestion from Moodius the other day
there will come out of the thirty billion US so,
as you said, isn't it billion? That really is real money.
And of course last time a lot of the PPI
money was recycled into cars. Do you remember that.
Speaker 2 (09:12):
Yeah, yeah, so look out life comes with so it's possible,
you know, this money goes straight back into the pockets
of the car companies through people buying new cars.
Speaker 1 (09:22):
That like PPI. When it's a sort of mass redress system, right,
everyone gets there's a fairly standard payment system. It's really
very efficient way to get money into the pockets of
ordinary people. It's like another people's Q.
Speaker 2 (09:34):
Quite. The only thing I suppose banks would question would
be to say, well that's all great, but then that
puts our cost of capital. We are seen as increasingly uninvestable.
Therefore we need to now pass that on in terms
of higher costs across the board in terms of all
our products. So yes, everyone sees a or at least
those who bought these products will get the money. What
you might see though, over the time, is a gradual
(09:56):
increase in the costs of a range of financial products,
which generally it won't be good for anyone. But you
know that's a longer term problem, and in the here
and now, you know a few thousand pounds would be
quite nice to a lot of people.
Speaker 1 (10:07):
Definitely, do you have any sense at all of it
when you say a few thousand pounds of exactly how
this might work. I mean, the only thing I've seen
is one a couple of the rulings so far, it
looks like there's about two percentage points in it in
terms of the discretionary commission. And then the FS insisted
on one of those cases that went through that the
difference was paid back, but with an interest rate of
eight percent on that gap.
Speaker 2 (10:26):
Yeah, so eight percentage is the standard rate that you
often get applied in these types of cases. At the moment,
it's all a bit up in the air because we've
just had these court rulings. So everything is really hinting
on now the appeals, and which is why the FCA
itself has actually issued a notice to all of the
different players in this, all the car finance companies, to
say there's a moratorium and moments one claims pending the
(10:50):
outcome of these legal cases. But after that, and I
guess we're really waiting to see if the Supreme Court
will take up the case. I think the expectation is
the Supreme Court will take up the case and probably
take it up pretty quickly, and then once we've got
a ruling there, then you have a far better idea
of how this is all going to play out and
what people might reasonably expect. But obviously anyone telling it
at the moment exactly what you can get can't be
(11:10):
telling the truth because no one knows until the course of.
Speaker 1 (11:13):
Rule in this well, that takes us neatly to the
assumption that there's going to be a big pal of
scams around this in the same way that they were
around PPI amoralty that will be totally legitimate claims companies
that will be suggesting that they help you with your
claim right eleanor that that's going to happen just like
it did last time. Yes, in theory.
Speaker 3 (11:31):
Yes, when I was speaking to people about it last week,
they were kind of saying you might also get lawyers
who jump on it as well, the kind of ambulance
chasers who will kind of make money and profit off
of people being on search amount whether or not going
to have a claim and if they can take it
to court.
Speaker 1 (11:43):
So yeah, I'm sure there will be. Well, you can
already see those on social media. They're already out there saying,
you know, you can claim going back twenty years etc.
On your car finance. But as we've discussed as a
much easier way to do it, you don't have to
use a claimed company. You simply use one of the
template letters they are exelcted you very much. Look out
for the difference between a legitimateclaims company, which again we
don't suggest to use, and a scam. And if you
(12:06):
do use a logist mcclaims company, you will find that
you'll be giving part of your compensation away to them,
which you don't really want to be doing either. No,
definitely not.
Speaker 2 (12:14):
There's also an interesting question here for the car industry.
There obviously the lights of VW aren't doing so well,
at the moment factory closures. Now you see that potentially
VW's own financing arm could obviously be among those companies
are going to have to pay out compensation costs to
people who've been sold these products over decades. So it's
(12:34):
probably just another issue for the car manufacturers already struggling
with evs, already struggling with cost of living crisis, all
of these kind of things, and it's just another problem
for them which is probably very unwelcome.
Speaker 1 (12:46):
Interestingly, there was an article on the newspaper the other day,
and I can't remember who wrote it. I just noticed
the headline and it said that the headline basically said
you shouldn't be claiming compensation for this, don't be greedy,
And I thought, well, that's not quite right, is it,
because who's been greedy already? Well? Quiet, thank commission takeers.
So I think the only thing that I would have
to add that is that I can't think of another
country anywhere. It must be only in the UK where
(13:08):
a massive miss selling scandal is actually a positive, because
in my health, our consumers out we will see, we
will see. Thank you both very very much, indeed, thanks
for listening to this week's Maren Talk to Your Money.
If you like our show, rate review, and subscribe wherever
you listen to podcasts. Also be sure to follow me
(13:29):
and John on ex or Twitter. I am at Maren
sw and John is John Underscore Stepping. This episode was
produced by some Asidi production support and sound designed by
Moses and Questions and comments on this show and all
our shows are always welcome. Our show email is merin
Money at Bloomberg dot net, and of course thank you
to Harry and Elanov joining us today and giving us
(13:50):
your insights. Very grateful for that. Want to listen to
episode of Married Talks Money ad free? Become a Bloomberg
dot com subscriber today. Check out our special intro offer
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