Discretionary Commission Arrangements - Complaints and Refunds
Close Brothers Motor Finance claims to be “one of the UK’s leading providers of motor finance; committed to providing a range of services allowing their customers to pay for their vehicle through monthly instalments.”
The independent vehicle finance company was founded by brothers William, Fred, and James Close in 1988 as part of the Close Brothers Group PLC, and promises to “make finance easy”, “treat you as an individual’, and “be a lender you can trust”.
Recent figures from the Finance & Leasing Association show that car finance is a multi-billion-pound industry – with its members cashing in over £37 billion worth of new consumer vehicle finance deals for both new and used cars in the UK, in 2021 alone.
A new car can set you back thousands of pounds, and for a large majority of the population is a purchase likely to take months of saving to afford. With the demands of everyday life, a car is a necessity for many of us, and often an old out-of-shape car, or growing family means that waiting to buy just isn’t an option. Car finance allows peoples all over the country to afford those all-important wheels- without the months of waiting and saving. Car finance allows customers to spread out the cost of their car over months or even years.
Car finance is the process of paying for a vehicle over a set duration of moneys or years, instead of paying the cost upfront. Although other options are available, these are the three most popular types of car finance:
A Personal Contract Purchase gives customers the option to pay a deposit on their vehicle (usually 10% of the cars total value), followed by monthly repayments over a set period of time. These monthly payments are based on the price of the car, the APR (interest rate) and the predicted depreciation of the car’s value over time. At the end of this time, customers are given the option to either keep their car and obtain ownership by paying the guaranteed minimum future value (GMFV or ‘balloon payment’), or they can step away and hand back the car.
This type of car finance means you don’t end up paying the full price for the vehicle through monthly repayments, but you don’t end up owning the car at the end of the fixed term. If you do decide to keep the car, the GMFV or ‘balloon payment’ will see you paying out more than the original price of the car. It should be noted, there are guidelines in place as to what condition a car must be in if you decide to give it back at the end of the payment period. This can include a maximum annual mileage, and charges for any damages deemed to be more than general ‘wear and tear’.
Hire Purchase refers to hiring the vehicle from the lender until you have paid off its full price. This is one of the most commonly used types of car finance and uses the vehicle itself as security for the loan. Customers can choose whether they to pay an up-front deposit (usually 10% of the cars total value), this is followed by set monthly repayments over a period of time.
This option can be attractive to customers as there are no mileage limitations, and no need for lump sums of cash to exchange hands. However, as the loan is secured against the vehicle, failure to fulfil the monthly repayments could lead to repossession and could negatively impact your credit score.
Personal Contract Hire (also known as leasing) is similar to hiring a car. Customers opting for PCH will pay a deposit (often the equivalent to three-six months of repayment), pay a fixed amount each month, and can use the car within the space of time in which payments are being made to the lender.
Car finance contracts of this type usually last for two to five years. Typically, longer agreements lead to lower monthly repayments. This type of finance does not however give customers the option to purchase ownership of the car once the agreed length of contract has ended.
Car finance, despite its obvious appeal, is the second most complained about financial product by consumers. Over a third of complaints made about financial products are made against car finance firms like Close Brothers Motors Finance.
Evidence of extensive mis-selling of car finance, including Personal Contract Hire (PCH) and Hire Purchase (HP) has been uncovered though an investigation by the Financial Conduct Authority (FCA). This means that customers have been mis-sold and over charged for the financing of their vehicle.
Lenders have been exposed for regularly incentivising car deals and broker to overcharge their customers, charging them high interest rates- meaning dealers and brokers receive larger commissions in return. One dealer has recently publicly admitted that the corruption of the industry allows them to “get away with murder”, and that they were “charging them (customers)to earn us (dealers) money”.
The mis-selling of car finance can be described as a dealer or broker allowing a customer to be sold a car finance product that is not appropriate for them and their finance situation. The FCA (Financial Conduct Authority) focuses on guiding customers to buy better value and more appropriate car finance products, making sure that the deal they enter into is affordable for them. Despite the best effort of the FCA, customers continue to regularly be mis-sold car finance.
The mis-selling of car finance can look varied and can arise from many situations. Here are some examples of what mis-sold car finance may look like if it has happened to you:
Close Brothers Motor finance claims their customers can be “confident that they’re dealing with a company where the treatment of customers is central to (their) corporate culture”. Despite their promises to customers, many customers claim they were treated poorly by the car finance company, and that they were mis-sold their finance deals.
Some customers have claimed that the price for the finance agreement they were quoted over the phone by salespersons was different to the credit agreement they were signed, with one customer claiming that an excess of 56% APR was added to his finance agreement.
Customers also claim to have dealt with issues for many months and sometimes years with Close Brothers Motor Finance, with resolution only being met with help from the Financial Ombudsman. Many claim that representatives of the finance company are unwilling to communicate efficiently with customers, causing issues to remain unresolved.
Other customers have alleged that Close Brothers Finance have placed a black mark on their credit score for failure to repay, despite prior contact with the company where a hold was agreed upon. This means that customers were unable to continue with many aspects of their lives such as submitting offers on houses due to poor credit score.
Many customers claim they were mis-sold their financial products, and that the salespersons they communicated with did not fulfil their duty of care when evaluating the “affordability” of their agreement.
Alongside these complaints, Close Brothers Finance have also been struck with complaints regarding hassling, bombarding and threatening customers over finance repayments. The law states that organisations may only send text messages or emails to individuals if they have agreed to receive them. If a company like Close Brothers Motor Finance does not adhere to this, they have broken the law.
If the reasons that someone may have been mis-sold car finance seem familiar to you and your car finance situation, then you may have been mis-sold car finance. In this case, it is your legal right to complain. Whether you are still repaying your car finance, or if you have paid the total amount, you can still make a complaint and potentially reclaim your money.
If you have struggled or are in an ongoing struggle to make your car finance repayments, then your loan could be deemed as “unaffordable”. A loan is only classified as “affordable” if you are able to repay the loan at the agreed rate without forgoing hardship, and are able to still pay for other commitments such as rent, mortgage repayments, and everyday expenses. If you are struggling, and you have not had a significant change in your financial circumstances since purchasing the car finance, you may have been mis-sold.
Redbridge Finance has helped many customers in this position. The team is able to investigate the thoroughness of financial checks carried out by the car finance companies to ensure that you were able to make repayments for the duration of the loan. The team can represent you and your claim, and in the case that they do not agree with the lender’s decision (in the case a refund is denied), they will pass your case over to the Financial Ombudsman. These complaints are complex and can last for many months, during this time you must keep up with loan repayments, or you may face repossession of your vehicle. Redbridge Finance will keep you up to date with all essential information during your complaint process and will always ensure you are in the loop.
If you think you have been mis-sold your car finance product, or are experiencing issues repaying your loan, you could be entitled to a refund or compensation. Contact Redbridge Finance today by going to www.redbridgefinance.co.uk and signing up, and the team can assess if you have a claim.