Member Info for Eureka1963

Https://www.networkrailmediacentre.co.uk/news/network-rail-property-and-bloc-announce-strategic-partnership-with-citra-living

A unique partnership between blocwork, a Network Rail and bloc group joint venture, and Citra Living, has been agreed that plans to build over 2,000 new homes across Great Britain.

Https://tinyurl.com/ypk3am2s

...new-build prices rose by 8.8% month-on-month and are up 16.6% yearly...

...New-build homes appear to be leading the recovery, with prices increasing by a huge 8.8 per cent across the month of January...

New build price boom:

...New builds have seen significant price growth, according to the ONS figures...

...Year-on-year, new-build properties have risen in price by a staggering 16.6 per cent...

...Homebuyers are willing to pay the premiums associated with new-build properties despite the cost of borrowing remaining substantially higher than previous years...

Citra Living:

Citra has a growing portfolio of over 1,000 professionally managed homes for rent...

...Citra aims to address the increased demand for rental properties by providing new quality homes...

[Citra will be paying a lot less than the guide price for these properties].

Hounddog10

"I also hope, if there has to be redress, the FCA learns from PPI and stops an open-ended free for all. So time limit to claim eg two years and eg requiring claims companies to put up deposits for each claim only refundable if the claim is successful."

FCA: Impact of the pause on the 3- and 6-year time limits

2.32 DISP 2.8.2R(2) provides that the Financial Ombudsman also cannot consider a complaint if the complainant refers it to it more than:

• 6 years after the event complained of, or (if later)

• 3 years from the date on which the complainant became aware (or ought

reasonably to have become aware) that they had cause for complaint, unless

• the complainant referred the complaint to the firm or to the Financial Ombudsman within that period and has a written acknowledgement or some other record of the complaint having been received

2.33 We are not making any changes to DISP 2.8.2R(2). If a complainant is concerned about these time limits expiring, they should complain to the firm and ensure they get written acknowledgement of their complaint having been received. This will stop the time limits for the purposes of DISP 2.8.2R(2). Our rules do not prevent a complaint from being made to the firm during the period the pause is in place.

The Group also now expects to pay down to a CET1 ratio of c.13.0 per cent by the end of 2026.

William Chalmers..."We've looked at both the regulatory outlook, we've looked at the business risk reduction that has been embarked on over the last several years...and all of that adds up to the 13% CET1 target ambition that we have."

Both the £2bn buyback and the 2026 CET1 target reduction to 13% are expressions of confidence in the business.

Hardup, no need to apologize for disagreeing when I stated that NWG had no material exposure to the Car finance scandal.

https://investors.natwestgroup.com/results-centre.aspx

16.02.24 Annual Results 2023 - Slides [Slide 20]

Corporate Loan Book - "Out of scope of FCA review into broker-introduced personal Car Finance" [FCA review relates to Discretionary Commission Arrangements.]

Nat West IR:

"The reason that Lombard is out of scope is due to Lombard not providing consumer motor finance via dealers and intermediaries. Our broker proposition faces into business users."

I intend to raise a point of contention with the FOS in respect as to why it is just the Lenders (Black Horse Ltd) that are being financially punished as a result of the FOS Test Case - DRN-4188284.

More than likely, this will be addressed within the skilled persons review, and has already been questioned by Black Horse Ltd.

From this FOS Test Case, this is how the Broker (Car Dealerships) profiteered:

1. The Broker paid £3,750 for the car Mrs Y’s bought. It advertised the car at £5,488 – the price Mrs Y ultimately paid for it – a mark-up of £1,738. That “sticker price” reflected the Broker’s view of the value of the car.

2. The car Mrs Y sold to the Broker had a part exchange value of £2,500. The Broker sold that car for £3,688 – a mark-up of £1,188.

3. Discretionary commission paid to Broker - £1,146.67

4. Support Payment to Broker - £152.38

FCA CONC 4.5.3 [Rules] - Commissions: credit brokers

A credit broker must prominently disclose to a customer in good time before a credit agreement or a consumer hire agreement is entered into, the existence and nature of any commission or fee or other remuneration payable to the credit broker by the lender or owner or a third party, where the existence or amount of the commission, fee or other remuneration could actually or potentially:

(1) affect the impartiality of the credit broker in recommending the credit agreement or the consumer hire agreement; or

(2) if made known to the customer, have a material impact on the customer’s transactional decision to enter into the credit agreement or the consumer hire agreement.

Hardup

...(CONC 4.5.3-4)...

277. In my view, the term “antecedent negotiations” is broad enough to cover failures by the Broker in this case to comply with its own regulatory obligations in arranging the credit that Mrs Y used to purchase the vehicle – i.e. the Broker’s failure to disclose the existence of commission in breach of CONC 4.5.3R and the other regulatory provisions I set out earlier in the decision (as I have already explained above).

278. As a result, in my view, the pre-contractual negotiations that took place between the Broker and Mrs Y are caught by s56(1)(b) of the CCA. And as a result of the operation of s56(2) CCA these negotiations “shall be deemed to be conducted by the negotiator in the capacity of agent of the creditor as well as in his actual capacity”.

279. In other words, when conducting the pre-contractual negotiations with Mrs Y, the negotiations conducted by the Broker in relation to the sale of the vehicle and the arranging of the loan are deemed to be conducted by the Broker both in its own capacity and in the capacity as an agent of Black Horse.

There are numerous Rules and clauses that the FOS can point to, and have done, to fully justify their decision to uphold this particular case.

Longtimeinvestor

...Am I right in understanding that Lloyds is currently liable for £ZERO...

During this 37 week pause (11th Jan - 25th Sep), firms can continue to provide a Final Response to Discretionary Commission Arrangements (DCA) complaints by the end of eight weeks after its receipt of the complaint, but does not have to.

Firms can choose to provide final responses to DCA complaints or make offers of redress during the pause.

The FOS has upheld complaints against Black Horse Limited and financial compensation awarded to those complainants. Claims are being handled by CMC's and through the Courts.

To date there will be a level of liability, but I do not envisage that to be significant at this stage, or indeed as part of the total DCA settlement of liability of these cases.

The FCA is using this pause to appoint a 'skilled person' to review historical motor finance commission arrangements across a number of firms. One of the reasons for this review was due to the extremely high number of cases (between January 2019 and the end of June 2023) where complaints were not upheld (rejected).

FCA data:

Data received from major motor finance lenders, shows that, between January 2019 and the end of June 2023, firms closed around 30,000 motor finance commission complaints, of which 99% were not upheld (ie rejected). Not all these complaints will be about DCAs.

However, before we banned DCAs, they were by far the most common commission arrangement. On average, between 2007 and 2020, approximately three quarters of all agreements had a DCA of some description.

Longtimeinvestor

...Am I right in understanding that Lloyds is currently liable for £ZERO...

During this 37 week pause (11th Jan - 25th Sep), firms can continue to provide a Final Response to Discretionary Commission Arrangements (DAC) complaints by the end of eight weeks after its receipt of the complaint, but does not have to.

A

The FOS has upheld complaints against Black Horse Limited and financial compensation awarded to the complainants. Claims are being handled by CMC's and through the Courts, however, at this time, I would expect

The FCA is using this pause to appoint a 'skilled person' to review historical motor finance commission arrangements across a number of firms.

Martin Lewis, founder of MoneySavingExpert.com, said:

The payout would be either the interest on loans (which is big), the commission (which is big), or the whole loan (which is huge)..."

FOS (Test Case: DRN-4188284)

To put things right, Black Horse should compensate Mrs Y by paying her:

⎯ the difference between (i) the payments she made from time to time under the finance agreement (at the flat interest rate of 5.5%) and (ii) the payments she would have made (including when she settled the loan early) had the finance agreement been set up at the lowest (zero discretionary commission paying) flat interest rate permitted (that is 2.49%);

⎯ interest on each overpayment at the rate of 8% simple per year calculated from the date of the payment to the date of settlement in accordance with my final decision.

As I explained in my Provisional Decision, I am not persuaded by Mrs Y’s original view that she should receive a refund of all the payments she made, plus interest. I’m mindful Mrs Y was in a position where she required, or at least considered it appropriate to take out a finance agreement (whether with Black Horse or someone else) in order to proceed with her purchase of her chosen vehicle, rather than (for example) proceeding as a cash purchase.

''''Likely the important large holders are pre warned''

there was no pre 48p drop secret from a couple of weeks ago, just regurgitated news .

about 6 months ago -

We were ALL pre-warned:

Lloyds Banking Group Annual Report and Accounts 2022

Note 47: Contingent liabilities, commitments and guarantees continued

{pg. 299}

Following the FCA’s Motor Market review, the Group has received a number of complaints, some of which are with the Financial Ombudsman Service, in respect of commission arrangements. It is currently not possible to predict the ultimate outcome of the complaints, including the financial impact or the scope or nature of remediation requirements, if any, or any related challenges to the interpretation or validity of any of the Group’s historical motor commission arrangements.

Fleccy

The three Doug Taylor Class actions don't appear to be doing much...

The information provided in the collective claim was to base an estimate to the potential claim against Black Horse Ltd...

https://www.assetfinancepolicy.co.uk/post/why-the-collective-action-against-used-car-finance-companies-should-fail

...But let’s assume the case is certified so that it proceeds. This article sets out why I don’t expect a collective action to be successful...

SUFCESSEX

I am still struggling to understand why Black Horse Loans are reasonable for pay any compensation here, it was the Car Dealers that increased interest rate to the Car Buyers to pay their commission via the added interest.

FOS

DRN-4188284

Conclusions

302. As set out above, I’m satisfied that Black Horse failed to act fairly and reasonably in its dealings with Mrs Y in all the circumstances of this case. In summary, this is for the following separate reasons taken individually (although taken cumulatively they reinforce my views):

⎯ In introducing and operating the discretionary commission arrangement with the Broker, Black Horse acted contrary to the guidance at CONC 4.5.2G and failed to have due regard to Mrs Y’s interests and treat her fairly as required by Principle 6.

⎯ It is likely a court would conclude that the relationship between Black Horse and Mrs Y was unfair to Mrs Y under s140A of the CCA for each of any of the following separate reasons:

(1) Black Horse’s introduction and operation of the discretionary commission arrangement which delegated the interest setting power to the Broker and created an inherent conflict between the interests of the Broker and those of Mrs Y by linking the amount of commission the Broker would receive to the interest Mrs Y paid. This created an unfair relationship both generally and because it meant Black Horse failed to comply with Principle 6 and CONC 4.5.2G.

(2) The inequality of knowledge and understanding created by Black Horse’s own failure to disclose the basis on which it would pay the discretionary commission payment and the Broker’s ability to determine the interest rate (and, therefore, the amount of discretionary commission it would receive and the payments Mrs Y would have to make).

(3) The Broker’s failure to disclose commission in accordance with its regulatory requirements (in particular, CONC 4.5.3R, CONC 3.7.4G(2) and Principle 7 and 8) in circumstances where this failure is, under s56(2) CCA, deemed to be to be a failure of Black Horse.

303. My findings that Black Horse acted unfairly and unreasonably are limited to the discretionary commission arrangement in this case. I am not persuaded Black Horse acted unfairly and unreasonably by operating and applying the Support Payment arrangements.

Longtimeinvestor

I thought that finance was agreed between the car buyer and the car dealer, and not between the car buyer and black horse.

The finance for the customer would be arranged between the Car Dealership (credit broker) and the Finance Provider (lender). Black Horse Ltd would be the lender.

In these cases the lender offered the credit broker two interest rates, this meant the lender delegated the interest setting power to the credit broker.

This created an inherent conflict between the interests of the credit broker and those of the customer (borrower), and allowed the credit broker to apply the higher interest rate of the those two interest rates, and where the lender was prepared to lend at the lower rate of interest.

Https://www.financial-ombudsman.org.uk/data-insight/blogs/dealing-complaints-car-finance-commission

We have been asked by some stakeholders whether we think this is “the next PPI” in terms of scale and numbers of complaints we uphold. Crucially, the size of the potential pool of complaints on this topic is significantly smaller than that for PPI.

Financial Ombudsman Service (FOS) data.

https://www.financial-ombudsman.org.uk/data-insight/quarterly-complaints-data

Complaints about hire purchase (motor)

Q1 2022/23

Enquiries 2,343

New Cases 1,751

% Cases Upheld 43%

Q2 2022/23

Enquiries 2,523

New Cases 2,149

% Cases Upheld 37%

Q3 2022/23

Enquiries 3,606

New Cases 2,987

% Cases Upheld 41%

Q3 2022/23 Note(s) - The majority of complaints about the product in Q3 were about charges, fees and commission.

Q4 2022/23

Enquiries 4,334

New Cases 4,414

% Cases Upheld 34%

Q1 2023/24

Enquiries 4,130

New Cases 3,678

% Cases Upheld 36%

Q1 2023/24 Notes(s) - We received 3,678 complaints about hire purchase (motor) in Q1 2023/24. Complaints about charges, fees and commission make up over a third of these complaints, largely because of complaints about undisclosed commission.

Q2 2023/24

Enquiries 5,141

New Cases 4,622

% Cases Upheld 32%

Q2 2023/24 Note(s) - ...70% of complaints about fees, charges and commission…

The uphold rate for these motor finance complaints brought by professional representatives was particularly low at just 8%, compared to a 42% uphold rate when cases in the same category were brought directly by consumers.

Note: Discussions with the FOS in relation to the 8% suggest that these were cases initially declined by the lenders, e.g. Black Horse Ltd, but upheld when re-submitted by the professional representatives (Claims Management Companies (CMC)) to the FOS.

However, these figures are based on a 100% claim success rate......Also, the reason the collective action has applied the dates in relation to claims of between 1 October 2015 and 27 January 2021, is that businesses (lenders e.g. Black Horse Ltd.) have to retain customer contracts for six years from the date they were made.

Those beyond 1 October 2015 will be far more complex to unravel when records are not held, and these claims will take far longer to reach any conclusion.

Http://tinyurl.com/mueubdbn

• Three major legal actions, the “CAR FINANCE CLAIM”, have been launched in the UK’s specialist competition court seeking compensation for approximately one million consumers who were unknowingly overcharged on their motor finance deals for used cars between 01 October 2015 and January 2021.

• The collective claims are expected to affect approximately one million consumers, with the total value of the claims being approximately one billion pounds.

• Anyone who bought a used car on finance from Black Horse, MotoNovo or Santander between 01 October 2015 and 27 January 2021 will be part of the class. The claim is an opt-out collective action, meaning affected customers are automatically included in the claims and are not required to take any action.

• The legal claims are being brought as opt-out collective actions against three of the UK’s largest motor finance providers by market share: Black Horse Ltd. (Lloyds Banking Group) (35.3%) MotoNovo Finance Ltd., (11.8%) Santander UK (9.4%).

WHO IS ELIGIBLE?

Anyone who entered into motor finance agreements with Black Horse, MotoNovo Finance and Santander to purchase a used car between 01 October 2015 and 27 January 2021 is covered by the claim. Up to one million consumers are thought to be affected.

https://www.carfinancingclaim.com

CLASS MEMBERS

We estimate that over one million consumers entered into affected finance agreements with one of Black Horse, Santander or MotoNovo within the relevant period and are therefore in the class.

CLAIM VALUE

Based on the UK Financial Conduct Authority’s calculations, we estimate that the claims could be worth around £900 million in total. (see Note 1.)

https://www.am-online.com/news/finance/2023/08/08/lloyds-lenders-faces-high-court-class-action-over-car-finance-overcharging

Three UK motor finance businesses are facing a class action in the High Court over claims customers were overcharged on used car loans between 2015 and 2021.

Black Horse, Santander and MotoNovo Finance, which control over half the UK’s car finance sector, are accused of applying excessive interest totalling nearly £1 billion. Black Horse faces £624m (see Note 2.) in claims, MotoNovo Finance £209m and Santander UK £166m.

Note 1:

I recognise the collective claim value set out by CarFinancingClaim of

+£900m and have used the following FCA data:

https://www.fca.org.uk/news/press-releases/fca-ban-motor-finance-discretionary-commission-models

The FCA estimates the changes would save customers £165 million a year.

2015-2021 [6 year period] x £165m [per year] = £990m

of which Black Horse Ltd accounts for 35.3% = £349.47

Note 2.

Pre 2015 [6 year period] * £165m [per year] = £990m

of which Black Horse Ltd accounts for 35.3% = £349.47

2015-2021 [6 year period] @ 35.3% = £349.47

Total (Estimated) Compensation Bill for Black Horse Ltd. = £698.94m

[This more than covers the £624m]

However,

Octopus Electric Vehicles, a subsidiary of Octopus Energy, has secured a strategic finance deal worth £550 million ( about $700 million) with Lloyds Banking Group to boost its employee-focused electric vehicle (EV) discount scheme. This initiative allows for salary deductions to facilitate the purchase of new EVs, offering significant savings and tax benefits.

https://uk.investing.com/news/stock-market-news/octopus-electric-vehicles-secures-700m-deal-with-lloyds-bank-93CH-3257043

Alex Crooke, lead portfolio manager of The Bankers Investment Trust

What about for the next 12 months?

Lloyds Bank

https://shorturl.at/hAEJK