Consumer redress or regulatory reform? Car finance and consumer credit law

While the car finance mis-selling scandal has shone light on hidden commissions, public discussion has failed to lift the bonnet on problems embedded in underlying loan structures. Dr Asta Zokaityte examines Personal Contract Purchase agreements through the lens of consumer credit law.

Dr Asta Zokaityte (a.zokaityte@kent.ac.uk), a senior lecturer in law at Kent Law School, University of Kent, has teaching and research expertise in contract law, consumer law, company law and corporate governance. Her work explores the regulation of private markets through a socio-legal lens, with a particular focus on financial governance, consumer protection and the normative foundations of legal regulation.

This summer's Supreme Court ruling in Close Brothers Ltd v Johnson [1] has given some clarity on the car finance mis-selling scandal, but not the kind of clarity that consumer advocates had hoped for. The Court rejected the idea that car dealers arranging finance generally owe fiduciary duties to borrowers, and held that non-disclosure of broker commissions does not automatically render a credit relationship unfair. Instead, unfairness under section 140A of the Consumer Credit Act 1974 [2] depends on factors such as the size of the commission, the way it was presented, the circumstances of the consumer and other relevant factors.