Car dealers’ finance scam to be banned

CAR buyers will save £165million a year under plans to ban salesmen from raking in higher commission through an interest rates scam.

As many as 500,000 customers have been ripped off by the deception, which was uncovered in a two-year investigation by the Financial Conduct Authority (FCA), the Government’s finance watchdog.

it found buyers were being charged higher interest rates on their car deals – raising the overall price of the sale and therefore the amount paid to the dealers in commission.

The scam meant a buyer could be paying £1,100 extra interest on a £10,000 fouryear loan – or around £165million year.

nine in ten new cars are bought through finance deals, with £37billion borrowed to buy new and used motors last year.

The FCA said the bulk of buyers are left in the dark over interest details when signing finance arrangements, which ‘creates an incentive for brokers to act against customers’ interests’. Christopher Woolard of the FCA said the ban, to come in next year, should save customers money.

Sue Robinson, of the national Franchised Dealers Association, called for the new rules to be ‘proportionate so there is a satisfactory outcome for both consumers and retailers’.