Premium Credit – Computer says DISCLOSE COMMISSIONS! Commissions must be disclosed. This is an AI generated summary of the recent High Court decision

The judicial review involving Clydesdale Financial Services Ltd (trading as Barclays Partner Finance) and the Financial Ombudsman Service (FOS) focused on the disclosure of commission amounts in car finance agreements. Here are the key details from the judgment:

Key Findings

1.???? Disclosure Requirements: The High Court upheld the FOS's decision, emphasizing that the commission arrangements between the dealer (Arnold Clark) and the lender (Clydesdale) were not adequately disclosed. The court found that the?existence and nature of the commission?must be disclosed to the customer

2.???? Regulatory Context: At the time of the transaction in 2018, the relevant rule (CONC 4.5.3 R) required the disclosure of the existence of any commission payable to the broker. This rule was amended in 2021 to also require the disclosure of the nature of the commission

3.???? Commission Models: The court highlighted that where there are different types of commission (e.g., fixed and discretionary), both must be disclosed. In this case, the discretionary commission was linked to the interest rate negotiated by the dealer, which was not made clear to the customer.

Implications

The judgment underscores the importance of transparency in commission arrangements. It sets a precedent that both the existence and nature of commission must be disclosed to ensure fairness and compliance with regulatory standards.