DSG Prestige Court of Appeal Decision Update

Monday 28th October

To our DSG Prestige partners,

On Friday the Court of Appeal ruled that the relationship between customers and intermediaries has been incorrectly understood and the approach taken by the industry to commission disclosure has not been sufficient to meet legal requirements.

As a result, the FCA regulations we have been working to were not correct. The new law is effective now. Therefore with immediate effect we must all change our approach to how we explain to customers about our role in arranging the finance facility and the commission we earn for doing so.

Several lenders have decided to suspend new business whilst they decide how to move forward. This is likely to mean a change to documentation in order to detail the amounts and implication of the commission payment.

Independent of what lenders decide, with immediate effect DSG will be asking all customers to e-sign a letter that explains the commission amount that DSG will be paid, how much of that we will be paying to you, the motor retailer and asks for their consent to this. Should a customer decide not to consent then this will mean we are not able to continue with the finance facility for that customer.

We are of course playing catch up here. That means we need to get consent on all deals in for payout, which will unavoidably result in some delay to existing payouts, which we will try hard to minimise. Moving forward we will introduce this consent requirement into the process at the stage before we issue the credit agreement for signing.

We appreciate the immediacy of these changes will cause questions. I hope and expect that your DSG contact can answer those for you. I also expect that there will be customers who do not consent to commission payments going forward, which is their right. However, this is the new reality and just the way we all work going forward.

Motor retailers, brokers and lenders have a history of adapting to regulation changes at short notice, and despite what some may say, we continually demonstrate that the customer is at the centre of our thinking. This is another challenge to motor retail and financing that I am sure we will all respond positively to.

We at DSG will continue to support you wherever we are able to do so.

If you have any queries please contact your DSG Prestige Business Development Manager in the first instance.

Kind regards,

Tim Marlow

Divisional Director, DSG Prestige