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Martin Lewis

@MartinSLewis

Car finance & potential commission reclaims, is it fair, is it dangerous?

Until the last couple of weeks we were only talking about possible refunds where people had hidden Discretionary Commission Arrangements (DCAs) which meant dealers could up interest to get paid more commission, without consumers knowing. In this area you can see the argument of lack of transparency and restriction of consumer choice.

Then a fortnight ago the Court of Appeal ruling came and said 'consumers need to know all material facts including the amount of commission' which opens the door to possible reclaims for all car finance commission and indeed could read across to other lending areas (though it will all depend on if the Supreme Court backs up that view on appeal) and today the FCA said people should log complaints on that too in case of a future time bar (see my earlier post).

When mulling this, I find it more difficult to see the unfairness and that redress is due on car finance firms with fixed commission that were following regulators guidelines. And even then if it is thought that redress must be due, the test surely must be something like was it hidden that there was commission, and most importantly was the commission charged excessive?

If not and we move to a model of car finance reclaims of 'any commission if amount wasn't known' was unfair and should all be repaid, is a push even for me, and may risk being counterproductive to consumers as it is a potentially existential threat to the consumer lending and could both mean less availability and higher costs in future.

I'd love to know your thoughts as to where the boundary should be..

Last edited

10:26 AM · Nov 13, 2024

https://x.com/MartinSLewis/status/1856644772326191110

67Sam

"But they do artificially inflate the level of demand in the market. Now I could be proved wrong, but after tomorrow when that extra demand is removed, I also suspect the share price might roll downwards a little faster and a little further. There are only ever 3 possible scenarios and I think down is the most likely one from here."

Who knows what will happen when the buyback is completed, but, when the 2022 and 2023 buybacks completed the SP trended steadily upwards from the day of completion of both.

The 2022 buyback finished on the 11th October 2022 and the SP that day was 41.53p. The 2023 buyback finished on the 25th August 2023 and the SP then was 42.3p. Look at the SP charts and you will see that the SP trended steadily upwards from those dates. Not to say the same will happen this time with the uncertainty with the Car Finance to the fore, but, the end of the buyback does not necessarily mean there will be no support for the SP from that point.

After 183 trading days, buyback complete to date:

Total shares to date....................................................3,651,721,108

Aggregate cost to date... ............................................£1,981,014,996.73

Average price paid to date..........................................54.2488p

Percentage of £2 billion buyback completed............99.05%

Buyback should be completed tomorrow.

Close Brothers can still apply direct to the Supreme Court for a hearing.

So 59,780,754 shares bought back today, but only 4,687,141 shares bought back on Friday? Wonder how the algo came up with that?

After 182 trading days, buyback complete to date:

Total shares to date....................................................3,599,576,929

Aggregate cost to date... ............................................£1,952,688,088.64

Average price paid to date..........................................54.2477p

Percentage of £2 billion buyback completed............97.63%

STP

"69, please get used to democracy!"

So get used to Brexit.

Longshort

"Once the buyback stops in a day or two, the rubber will meet the road. Then it will be a decline till February when a new buyback is announced which will support the shareprice till the kitty runs out again."

Why do you think the share price will fall when the buyback completes? When the 2022 and 2023 buybacks completed the SP trended steadily upwards from the day of completion of both to Final Results.

The 2022 buyback finished on 11th October and the share price that day was 41.53p. From that point the share price trended steadily upwards to 52p at Final Results in February2023.

The 2023 buyback finished on 25th August and the share price was 42.3p. From that point it trended steadily upwards until 7th January to 47p. It fall back then after Martin Lewis stoked up the rhetoric surrounding Car Finance but the SP recovered and was at 46p on the day of the Final Results in February 2024.

Wideride96

"However, for me, if the 3.9Bn comes to fruition I think 30p is entirely possible?"

How do you think it go go to 30p? From news of the Appeal Court ruling and rumours it could cost Lloyds £3.9B worst case scenario, the SP has fallen from 62.5p to 52.9p, so the market cap has already fallen by £5.94B, far more than the worst case scenario cost.

STP

"TFE and the idiot right wing rC15t extremists simply cannot accept the outcome of the recent general election in the UK."

You cannot accept the outcome of the 2016 Brexit vote and that was won by a MAJORITY 52% of all votes cast to leave against 48% remain.

After 181 trading days, buyback complete to date:

Total shares to date....................................................3,539,796,175

Aggregate cost to date... ............................................£1,920,254,518.81

Average price paid to date..........................................54.2476p

Percentage of £2 billion buyback completed............96.01%

Only 4,687,141 shares bought back today?

What an absolute snowflake taking a harmless tongue in cheek comment and blowing it totally out of proportion.

Simo

I think you will find what the "professional" share commentators have actually said is that Lloyds would have a reduced share buyback in 2025, some are giving figures of £1B instead of £2B, or not conduct a share buyback at all in 2025. We have to await the release of the 2024 Final Results on 20th February next year to find out what they actually decide.

ASI

So as you say, Insurance and loans follow different rules. So why are you putting forward how the Insurance sales work as objective evidence that car dealers/brokers are not adhering to the rules when it is not relevant as they follow different rules?

ASI

"Indeed, the platform provides information on each page, distinguishing quotes that involve a direct commission from those not directly covered by the company's service. Additionally, it offers details upon selecting 'more details' for each quote. "

And I am currently reviewing quotes for my home insurance with Go Compare. When you select "more details" for each quote, It details the annual price without interest charge if paying by lump sum, the monthly cost if not paying lump sum and the total cost with interest charge. There is further breakdown of the costs and no mention anywhere of commission payments.

After 180 trading days, buyback complete to date:

Total shares to date....................................................3,535,109,034

Aggregate cost to date... ............................................£1,917,754,561.85

Average price paid to date..........................................54.2488p

Percentage of £2 billion buyback completed............95.89%

What about the 2 Asian men that assaulted police officers at Manchester Airport! Seems that has all been swept under the carpet though!

ASI

"Indeed, they disclose that they earn a commission when you apply for a quote and they also provide links to lenders not included in their coverage, similar to Money Supermarket and other comparison websites."

But YOU have to navigate through the menus on their website to find that information, and all it says is they are paid a commission. It does not specify how much. And it is not specifically itemised on the quote(s) that you subsequently receive. So how is that different to car finance where it is detailed in the paperwork that a commission may be payable to them from the lender, the information is there. The onus is then on the buyer to read the paperwork fully before signing on the dotted line, as when you sign the dotted line you are saying you have read the terms and conditions and accepted them. The FCA regulations state if the buyer requests then they must advise how much this commission would be, so the onus is on the buyer to read the paperwork fully before signing and then ask how much commission is payable if important to them. I bet none of them read through the paperwork fully before signing.

After 179 trading days, buyback complete to date:

Total shares to date....................................................3,483,312,842

Aggregate cost to date... ............................................£1,889,378,795.00

Average price paid to date..........................................54.2409p

Percentage of £2 billion buyback completed............94.47%

STP has wound his neck in and is keeping his head low after the humiliating pasting he got from the upticks to mark99999 post at 09:28! 🤣🤣🤣