Discretionary Commission Arrangements - Compaints and refunds

You do not need to use a Claims Management Company. You can make the claim directly to the lender and if they reject your complaint you can take it to the Financial Ombudsman Service free of charge, but you must do this within 6 months of the lenders Final Decision Letter.

Startline Motor Finance is owned by the IM (International Motors) Group and was founded in 2013. It appears to be a major provider of specialist finance solutions to the UK motor finance market, and claims to provide flexible resolutions to approximately 50% of the top 50 franchise dealers, and 70% of the top 50 independent car retailers (measured by gross revenue). Startline has its headquarters in Glasgow, employs over 170 people, and offers both PCP and HP finance packages. Startline’s website professes that it was founded to conceive of a new approach to motor finance. More about this below.

More about Motor/Car/Vehicle Finance

Motor Finance is a multi-billion-pound industry, so it is not surprising that there are so many brokers and lenders all keen to be part of a very lucrative business.

As a new or second-hand car often cost thousands of pounds, and most drivers cannot afford to buy outright, car finance is a way of getting the transport you need without having to save up or buy a low-cost vehicle that has perhaps seen better days or is not suitable for your needs. Motor finance is a good way to have a decent vehicle while spreading out the cost of it over multiple months or years.

There are four principle ways to finance the purchase of a vehicle, one of which is a personal loan. This is not a specialist loan, it is a regular instalment loan, and does not have to be linked to the purchase of a vehicle. An instalment loan will usually be comprised of the purchase price of the vehicle, be that car, motorcycle or van, plus interest. This sum is then divided into pretty much equal amounts according to the number of months you wish to repay over. The vehicle is yours from the beginning of the contract and you are allowed to sell the car at any time during the loan period.

The next three methods of finance are motor specific, and the second one is, to date, the most commonly used way to finance your four wheels. PCP (Personal Contract Purchase) is a loan for a motor vehicle; it differs from an instalment loan in that you do not borrow the purchase price of the car, and you do not own it, even at the end of the agreement (unless you choose to pay a large final/balloon payment). A deposit is paid, typically 10% of the vehicle’s value, followed by a set number of monthly payments, which are based on several things. These are the price of the car, the APR and the expected depreciation.

The third way to spread the cost of purchasing a vehicle is PCH, or Personal Contract Hire, and is in general recognised as leasing - so not dissimilar to renting a car. Again, as with PCP, you pay a deposit, but this amount is routinely equal to three to six times the amount to be repaid monthly. Car leasing agreements generally run for between two and five years, and mostly, the longer the agreement, the lower the monthly payments. The notable difference between PCH and PCP is that with PCH you do not have the option to buy the vehicle at the end of the arrangement.

The fourth method of vehicle finance is the least complicated, and this is Hire Purchase (HP). A deposit is paid, approximately 10% of the value of the vehicle) and you then pay off the value of the car, plus interest, in monthly instalments over a fixed term. As the vehicle is used a security for the loan, you do not own the vehicle outright until the last repayment has been made.

Motor/Vehicle/Car Finance and Complaints

Given the huge and still rising popularity of motor finance, it should be of no surprise that a recent survey conducted by Which? determined that mis-sold motor finance was the second most complained about financial product in the UK, with over 33% of complaints being made against motor finance firms, such as Startline Motor Finance, Go Car Credit, Blue Motor Finance, CarFinance247 and numerous others. Complaints range from being sold a vehicle that then developed faults to their vehicle being repossessed after one defaulted payment. The majority of complaints however are that the loan was mis-sold.

Car Finance Mis-selling

Essentially this means that the customer has been sold a car finance product that is not right for them. There are various situations where this mis-selling may arise; for example, if the person selling you the finance did not fully explain the deal to you (this may be due to the salesperson having an insufficient knowledge of the deal). Other examples could be that the salesperson did not make it clear who was to be responsible for any car repairs, or if they “recommended” a product – any person selling a motor finance product should be “neutral” and offer a variety of options such as different interest rates, deposits and repayment periods. Many customers also claim that when it came to establishing affordability by the sales person, the checks made were not comprehensive enough.

Regarding affordability, we know that many motor finance customers assume that if they are able to make their repayments on time, then the finance is affordable.

Unfortunately, it seems that many car finance customers (and customers of other types of loans such as payday loans or guarantor loans) believe that if they manage to make their repayments on time, it shows the finance/loan was “affordable”, but this is not the case, as the FCA and FOS have a different definition, and this is key when it comes to making a complaint. They state that a loan is only affordable if you can make the repayment on time, without hardship, and still being able to meet your other financial commitments, for example, other debts and normal household bills. As having a roadworthy car is a primary concern for many of us, to enable travel to work, school etc., car finance repayments are often made a top priority as we cannot afford for the car to be repossessed. This priority may mean that credit card balances increase, further loans are taken out to cover other expenses, and/or that other bills are unpaid; if this situation occurs, the loan was not affordable.

More about Startline Motor Finance.

Startline’s CEO, Paul Burgess, believes that Startline has tackled the standard and established approach to motor finance by developing a unique and flexible viewpoint which focusses on meeting the transitional requirements of used motor buyers. It has been claimed that SMF (Startline Motor Finance) has basically spearheaded the concept of “near-prime” motor finance in the UK used car trade.

SMF has turned on its head the notion of simply two types of borrower – prime, or sub-prime. SMF identified that nearly 20% of potential buyers fall somewhere in between – creating a ‘near-prime” category. SMF claims to frequently offer finance to applicants (through an exclusive combination of human skills, technology and financial awareness) who have been declined finance by mainstream prime lenders (e.g., banks, credit card providers) but without the staggeringly high interest rates and restrictive terms typically offered to sub-prime borrowers.

SMF maintain that they have a less binary, or black and white, method of establishing if an applicant is finance-worthy, and that the terms offered to those that fall in between prime and sub-prime are more attractive, and much fairer, given that dealers potentially pass one in five customers straight from prime to sub-prime lenders, with APR rates sometimes doubling for those dropped from one to the other. SMF argue that the elements customarily employed to credit score customers are no longer relevant and that actually, there are many sound applicants who would ordinarily be missing out on fair and affordable terms. These elements include dwindling home ownership, the growth in contract and temporary working and a plethora of other widespread changes to general economic situations, many of which are developing into highly relevant factors in this decade.

SMF’s procedure is to scrutinise the applicant’s background/situation, quite often participating in discussions with the potential customer and dealer. The theory is that, rather than go by a rigid set of rules and classifications which do not always present an accurate or relevant picture, SMF can assess the person’s overall financial situation, and endeavour to propose a cost-effective result that satisfies their needs.

Problems and Complaints with Startline Motor Finance

The main and most common complaint about Startline Motor Finance is the mis-selling of the deal and its unaffordability. Another common complaint is that soon after picking up the car, it developed issues or dangerous faults, and SMF were not helpful in solving these issues. Customers feel that as soon as SMF have their money, they are left very much on their own to resolve any issues, and in some cases, as SMF has not addressed their complaint in a timely manner, the customer has been unable to reject the car as the deadline has passed.

Companies like Redbridge Finance, who have helped many customers who believe that they were mis-sold vehicle finance, have seen complaints from people who had active payday loans, or a gambling addiction (which was completely obvious from itemised bank statements), and yet have still been given finance, when it was evident that this finance was just not affordable. If you feel that you may have been mis-sold car finance by Startline Motor Finance or any other motor finance company, then Redbridge Finance may be able to help. We can investigate the thoroughness of checks, or as the Financial Ombudsman Service puts it, “reasonable and proportionate checks,” to ensure that you were able to make the repayments for the whole duration of the loan. We can represent you and your claim that you were unable to afford the loan and if we do not agree with the lender’s decision (this being a “no” to a refund or compensation, or an offer that we feel is too small), we will then pass your case on to the Financial Ombudsman. Even if you have paid off your car finance loan, you can still make a complaint if any of the above criteria applies to you and the loan you were sold.

*These complaints may take many months. You will have to keep up the loan repayments during this time, or your car may be repossessed. *

If you have had problems paying your loan, or you think you have been mis-sold a loan, then you could be entitled to a refund and/or compensation. Equally, if you feel that you have been treated unfairly, for example if your financial circumstances changed and Startline Motor Finance did not try to help you in any way, contact Redbridge Finance today by going to www.redbridgefinance.co.uk, sign up, and we can assess if you have a claim.