Motor dealer legal firm Lawgistics has claimed to have been ‘inundated’ with calls from concerned dealers, who are worried finance companies are unnecessarily passing on complaint costs to them.
The surge of complaints to the firm followed an article it wrote about an anonymous lender who, it said, had: "dreamt up a novel wheeze to ensure that all the nasty bits of Section 75 of the Consumer Credit Act (CCA) and more besides will be neatly and unceremoniously dumped on any poor unsuspecting dealer whenever the finance house (and they will) decides to capitulate to even the most spurious of consumer gripes."
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Lawgistics said the lender had inserted terms intended to ensure it would be fully indemnified by the dealer for any consumer complaint, which the firm said went above and beyond what was called for by the Consumer Rights Act.
As a result, Lawgistics recommended the dealer to not sign the agreement.
Following the publication of this advice, Lawgistics said that a number of dealers had reported similar situations.
It accused some finance companies of sometimes agreeing to a customer complaint in order to avoid the complaint being escalated to the Financial Ombudsman Service, which results in an automatic £550 fee per investigation after a set number of cases.
Lawgistics advised dealers to watch out for the following terms in dealer contracts:
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By GlobalData- "The obligations of the dealer are intended to apply in addition to the rights and remedies available to the customer under any other statutory provision".
- "The Finance Company shall in its sole discretion determine an appropriate reduction in price."
- "If a customer exercises their right to reject, the dealer will pay the entire purchase price back to the finance company and give the customer their entire deposit back".
- "The finance company can claim all losses etc following a breach or alleged breach".
The firm did note that not all lenders used terms such as the above, and that it had seen examples of ‘fairer and more reasonable terms from finance companies,’
However it added: "In short, consumers already have an abundance of rights and so there is no need for finance companies to add to those, especially when in doing so they are arbitrarily passing on the cost to unsuspecting dealers."
