Broker Cancellation Fees - Read the small print | Legal matters | Back Room Forum

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Mon 23 Jan 2017 13:27

Broker Cancellation Fees - Read the small print - TheBroker

We have just taken on board a customer who was originally going to go with Company A.

They filled in a finance application form (and were also told that to apply for finance they would need to sign the order form up front) and went on their way. They also approached us for a quotation and we came in £15/month cheaper. Logically the customer decided they wanted to go with us for the reduced rate realising Company A were clearly not competitive. Only 2 days after they did the finance application, they contacted Company A and said they did not want to use them.

Company A then threated the customer with a Cancellation Fee of over £2,000! (No that was not a typo). The customer had not been signposted to such a huge cancellation fee and on first glance of the paperwork he signed it was not obvious. In fact it was tucked away in smaller print stating that the cancellation fee would operate and it would be equal to their initial rental (in this case 6 payments). There was no monetary figure given. No bold of Cancellation Fee or anything of the sort, nor was the customer told of the cancellation fee. So for sending a form in the broker is expecting over £2000 (they will not have incurred any fees from the funder or manufacturer or supplying dealer).

The customer has decided not to proceed with Company A, especially in light of their attitude etc and will be fighting the cancellation fee.

The worying thing here, aside from the well hidden cancellation fee is the lack of cancellation policy. There is none. They claim that whilst a customer is entitied not to proceed with the finance etc once they have signed the order they are liable for the fee full stop irrespective of Distance Selling Regs etc, FCA guidelines or anything else for that matter.

So a few words of advice:

1) When completing a finance application, make sure you are not being tied to doing business with that broker, even if you are accepted on finance.

2) Check for cancellation fees (make sure they are REASONABLE) and the policy, if none are obvious (they should be), ask as there are always cancellation fees and the policy should allow for a grace period

3) Do not get pressured into doing business with someone, take at least a couple of hours to consider things if you feel you are being pressured.

I have omitted the name of the frankly awful Company in question as I am not able (in mutual agreement with Admin) to publicise who I represent.

However, should admin wish me to publicise the name of the Company in question I will do under a seperate purely factual post.

There are many good finance brokers out there who can be very helpful and save you considerable sums of money if you want to finance a car in some way, but there are also some very bad ones so please do not get stung.

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Mon 23 Jan 2017 13:50

Broker Cancellation Fees - Read the small print - RobJP

My sympathies are somewhat limited in this case.

Yes, having the cancellation fees (or cancellation policy) not made clear is pretty good grounds for the said fees being un-enforcable in law. The Unfair Contract Terms and Conditions Act makes that pretty clear.

However, the person did, of their own volition, sign an ORDER FORM - and a basic command of english tells you that if you place an ORDER for something, you are agreeing to purchase it. Finding good cheaper at a later point, and thus just changing your mind, and wanting to purchase from the cheaper supplier, would not be grounds for cancellation of the order.

The customer could have saved themselves a lot of grief by doing the 'shopping around' part first, BEFORE placing an order.

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Mon 23 Jan 2017 15:29

Broker Cancellation Fees - Read the small print - SLO76

Have to agree with RobJP. As a salesman I've experienced customers doing this. You spend hours with them, they sign on the dotted line, we've arranged finance, negotiated on the cost of the car and the finance rate, begun prep work on said car only for them to turn around later on and cancel then expect their deposit back. We allowed them to switch it onto another car In stock but never returned it.

Any deal should involve a cash or card deposit of some kind to secure the customers comiment and cover any costs if they change their minds. I'm not sure where the law stands on persuing them for costs (£2,000) which are clearly far beyond what the firm will have expended on the cancelled deal however. Certainly when I was selling in the 90's i remember one case where a customer cancelled a deposit cheque for £100 and was being persued by the firms solicitor for loss of earnings and breach of contract. More to stop him wasting anyone else's time than anything else to be honest as he was known for doing the same thing elsewhere.

At the end of the day you should do your shopping around before committing to a deal. It's common courtesy and hardly fair to waste some poor sods time. If you then find a cheaper deal after you've bought then tough.

Edited by SLO76 on 23/01/2017 at 15:30

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Mon 23 Jan 2017 15:57

Broker Cancellation Fees - Read the small print - TheBroker

Agreed but I think the issue here is threefold.

1) the customer was not able to propose finance and then make a decision, he was expected to sign up there and then with little time to reflect

2) a cancellation fee of over £2000 is way too excessive, epecially for what amounts to an hours work as the company in question will definately not have incurred any cancellation fees from anyone themselves. Plus the cancellation fee is greater than the commission they would have earned.

3) not signposting such onerus terms is disingenuous to say the least and i predict unenforceable

As I said in my OP, make sure you read the T's & C's to ensure you know what you are signing an that you have an out if you need one (a cancellation policy with a cooling off period is not beyond reason). Yes in the used sector it is different as the car could have been sold to someone else, and money spent on prep etc but in finance broking the costs to our business are relatively nominal especially at such an early stage.

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Mon 23 Jan 2017 16:16

Broker Cancellation Fees - Read the small print - SLO76

Agree totally that everything should be clear for the customer. It's unlikely a court of law would be very understanding towards a firm that produced such a figure and hid it in small print. I always wrote clearly on order forms that deposits were non-refundable and explained it to buyers while other staff refused to do this for fear of upsetting punters which I thought was a mistake. They should clearly understand they are committing to a purchase.

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Mon 23 Jan 2017 16:58

Broker Cancellation Fees - Read the small print - skidpan

My view here is quite simple.

Only use a Broker that puts you in touch with a dealer and nothing more.
Never use a Broker that asks for any money up front.
Never use a broker that asks to be paid directly when the car is ready to be delivered.

If you follow rule 1 the purchase is exactly like buying a car from your local dealer except you gat it far cheaper. The broker gets his cut directly from the dealer. You will be carrying out the transaction under the dealers normal T & C's and still have the ability to use any manufacturer special offers just like I did when I bought the Seat and now with the Skoda.

There are plenty of good brokers out there but unfortunately there are just as many bad ones.

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Mon 23 Jan 2017 18:26

Broker Cancellation Fees - Read the small print - TheBroker

I would question point 1 as a broker will often arrange finance which can be with a 3rd party funder the dealer cannot compete with nor access. The broker should do far more by way of customer service than just take an order. We take pride in going the extra mile and we have many happy customers who refer us often (just took another referral today).

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Tue 24 Jan 2017 15:12

Broker Cancellation Fees - Read the small print - skidpan

My view here is quite simple.

Only use a Broker that puts you in touch with a dealer and nothing more.

I would question point 1 as a broker will often arrange finance

Dealers and brokers both get commision for selling you finance and in many cases they make more from the finance than the sale of a car.

Do your homework and search for the best finance deal you can get both on the internet and high street banks, then get the dealer or broker to beat it.

Manufacturers deposit contribution deals can be great, had 2, paid both off early and kept the cash, thanks Seat and Nissan.

The Skoda I have bought came with full broker discount and then I got the manufacturers 0% finance, beat that.

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Wed 25 Jan 2017 06:39

Broker Cancellation Fees - Read the small print - TheBroker

Well done on your deal.

It is worth pointing out that different customers require different types of financial products.
Some with an avenue to buy and some just contract hire.

Either way there are several key factors in finance for cars:
1) cost of funds (how much it costs to borrow £x)
2) manufacturer discount
3) dealer and/or funder discount
4) Residual value

This all forms the total cost of ownership which is more important than a low interest rate.

Just because cost of borrowing is cheap doesn't mean overall that is the best deal for a given person.
A 0% finance deal on a car with a certain discount can cost more than another deal with say 9% Apr but a much bigger discount.
If you have no intention of keeping a car beyond 2 or 3 years, often contract hire is much cheaper overall.

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