Asset Finance

Temporary pause on new finance proposals

Important update: We’re back open for business

Following the UK Court of Appeal judgment on Friday 25th October, we took the decision to pause new accepting new asset finance proposals from Monday 28th October while we worked to mitigate the legal implications to protect our dealers, brokers and customers.

We have now made the necessary adjustments to ensure the business can operate within the legal requirements set out in the judgment and are now open for new business in Asset Finance lending.

We do understand the pause to new business created challenges for you, and we thank you for your patience and support while we have been navigating the impact of the judgment.

On 25 October 2024 the UK Court of Appeal published a judgment on three cases relating to motor finance agreements where it upheld the claimants’ appeals.

The Court of Appeal judgment found that when acting as credit broker, a dealer or motor finance broker:

  • Cannot lawfully receive a commission from a lender without obtaining the customers fully informed consent to the payment.
  • Owes a fiduciary duty (a duty of loyalty) to act in the customer’s best interest.

All transactions will now need to include our signed commission disclosure consent form.

The commission disclosure consent form will explain to the customer:

  • The total commission payable on the customers agreement.
  • The relationship between the credit broker and Aldermore.
  • The calculation of the commission for that agreement.

The customers will then be asked to provide their explicit consent to the payment of commission before they can proceed to signing the agreement.

Please click here to download our commission disclosure consent form.

PLEASE NOTE: YOU’LL NEED TO DOWNLOAD THE FORM TO ADOBE ACROBAT TO ENABLE YOUR CUSTOMER TO E-SIGN THE FORM.

  • Commission disclosure consent form

    This document must be presented to the customer for signing first. The customer must sign and date this form.

    Download form

Important Information

  • From 9.00 Wednesday 6th November, all asset deals up to an advance of £250k will have a fixed margin and commission scheme.
  • Asset deals with an advance over £250k or any approved credit lines over £1m will have commission and margin advised by us to the broker on a deal-by-deal basis.
  • Car pricing schemes remain unchanged.

We’ve also standardised our document and option to purchase (OTP) fees across all of our regulated and unregulated activities.

  • Document fees will now be £100, and will be fixed, with no fee-sharing.
  • OTP fees will now be £10+VAT.

To confirm all commissions and fees are fixed and not subject to negotiation.

You have a continued obligation to comply with law and regulation under the Financial Conduct Authority’s Consumer Credit Sourcebook.  Although Aldermore are providing a commission disclosure journey post-acceptance, they do not supersede your obligations to a customer pre-acceptance.  The following is a summary of your obligations, this list is not exhaustive, only you can determine the full extent of the changes you’ll need to make.

  • You are required to prominently disclose to the customers the existence, nature and amount of the commission you will receive in all circumstances and for all products. This disclosure must be provided in good time before an asset finance agreement is entered into and therefore require you to provide this during the sales process ahead of acceptance and pre contractual documentation.
  • A customer must have enough time and information to make an informed decision, and the customer must have the ability to not proceed with the transaction
  • You must fully disclose the services you are providing to the customer and the nature of your lender relationships, for example:

o            That you are acting as a credit broker and that you are not providing impartial or independent financial advice of recommendations.

o            That you do not offer a whole of market financial solution.

o            The fact that you have commercial arrangements with Aldermore (and other lenders, as appropriate) that may require or provide an incentive for you to refer business to your funding lenders first (such as wholesale funding, term loans, advance commission).  

o            That these commercial arrangements and the commission payments you receive mean you can’t provide impartial advice.

o            Where you work with a limited lender panel, provide details of the panel.

o            If you are not searching all of your panel for quotations, you should explain your reasons.

o            If you work with a finance broker, advise the customer who the broker is and when you would refer the customer’s application to the broker. (If you work with a broker, you must ensure the broker is also complying with its obligation to disclose commission and obtain the customer’s fully informed consent).

  • You must explain that the finance product you are offering may not be the best product available to the customer on the open market.
  • You would need to remind customers that they have the right to ask questions, if they do you will be required to answer them.
  • You should consider whether there are any other circumstances which could affect your impartiality or ability to act in the customer’s best interests and tell the customer about this
  • Any disclosure you make should be prominent and easily understood by customers.
  • It is your responsibility to keep a record of the explanations provided to the customer and to be able to evidence that consent was obtained from the customer.
  • It’s your responsibility to ensure that all your staff are trained on the new requirements, the need for disclosure and consent, and that they can clearly explain the commission model that your brokerage is on. A record of this training should be retained.

 

You must ensure that you are fully complying with all of the requirements relating to commissions.  

We’ll increase the number of welcome calls and SMS messages that we make to customers. This means that the “mobile number” field for the main contact on the agreement document is now mandatory.

Our customer welcome letters will include the amount of commission that we’ve paid to you.

We’ll clawback commission from you in full following any upheld complaints regarding commission disclosure.