Jurisdiction(s):
United Kingdom

R (Clydesdale Financial Services Ltd) v FOS: High Court upholds award on motor finance discretionary commissions; dealer conduct attributed under CCA 1974 s56; FCA Principle 6 breach (England and Wales)

Published on: 30 January 2025

Published by a LexisNexis Financial Services expert

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Article summary

What are the practical implications of this case?

Appreciating the reach of this ruling will also aid advisers guiding clients on broker commission structures and their potential effect on the interest charged under a conditional fee agreement, together with the precise disclosures that must be made to consumers about any commission in place. Commission arrangements of the sort agreed between Arnold Clark and Clydesdale in this matter were prohibited by the FCA in 2021. Nonetheless, the court acknowledged that a significant number of car purchases occurred in contexts where those or comparable terms existed or might have applied, or could potentially have been present. The Ombudsman concluded that Arnold Clark recommended to Ms Lewis a Clydesdale finance product (the conditional sale agreement) which formed part of the overall transactional package enabling her to acquire the vehicle, alongside the part exchange of her previous car and a modest cash contribution. Arnold Clark’s recommendation of Clydesdale’s finance terms constituted part of its antecedent negotiations ‘in relation to the goods sold or proposed to be sold’, within CCA 1974, s 56(1)(b) and 56(4)...

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