Investments - Strategies, Ideas, Options & advice

[Tashyboy]

It's been common knowledge for the 30 years I've been buying cars that dealers make commission selling us finance. It's odd to me that any car buyer would believe that a car dealer has the customer's best interests at heart.
I don't really understand how any car buyer has thought differently.

I think the problem is that people do realise that taking out a loan. Folk are getting commission. But they never knew how the commission was paid. Or the fact that they were paying for it in bucket loads without knowing.
For those that are old enough to know, endowment mortgages is a classic Example.
I took out one with Standard life. A £35 K mortgage. Top investment estimate was £55k when it matured. Bottom was £42k. It made £25k when it matured. Standard life issued a standard life promise after 12 years and promised to make up the shortfall. A couple of years later it withdrew its promise. So people went down the line of Miss selling. We were one of them. We were asked “ were you aware that there may be a shortfall when the policy matured”. Seriously who is going to pay for a 25 year mortgage knowing there could be a shortfall.
We won our case. As did thousands of others.

 

[RichA]

I think the problem is that people do realise that taking out a loan. Folk are getting commission. But they never knew how the commission was paid. Or the fact that they were paying for it in bucket loads without knowing.
For those that are old enough to know, endowment mortgages is a classic Example.
I took out one with Standard life. A £35 K mortgage. Top investment estimate was £55k when it matured. Bottom was £42k. It made £25k when it matured. Standard life issued a standard life promise after 12 years and promised to make up the shortfall. A couple of years later it withdrew its promise. So people went down the line of Miss selling. We were one of them. We were asked “ were you aware that there may be a shortfall when the policy matured”. Seriously who is going to pay for a 25 year mortgage knowing there could be a shortfall.
We won our case. As did thousands of others.

The endowment mortgage thing was very different though. People who didn't really understand investments were misled about the risk involved in essentially playing their mortgage payments on the stock exchange.

The car finance thing makes no sense to me. It's always been a requirement for the interest rate and total amount to be repaid to be declared to the customer. So you know how much you're paying when you sign.
Why would anyone think that those who fund and arrange your loan are doing it for free?
Many dealers have spent years shaving the margin on the cars knowing they can get their commission on the finance. So the total price paid for the car is the same, it's just the source of the commission that's different - the finance rather than the car price.

 

[nickjdavis]

There is still the discretionary commission agreements that the FCA has to make a judgement on as to whether it will set up a compensation scheme.

Whilst folks should realize that there will be commission earned by the dealers on the finance agreement, they probably were not necessarily aware that the dealer could increase the interest rate and earn themselves higher rates of commission.

 

[RichA]

There is still the discretionary commission agreements that the FCA has to make a judgement on as to whether it will set up a compensation scheme.

Whilst folks should realize that there will be commission earned by the dealers on the finance agreement, they probably were not necessarily aware that the dealer could increase the interest rate and earn themselves higher rates of commission.

But were the customers aware of the interest rate they signed up to pay?
Yes, they must have been.
Since when is every cost and commission that we pay when buying something itemised on our paperwork?
It just seems like speculative litigation that will end up costing the future customers eventually. The finance houses won't just volunteer to make a 10 year loss to compensate past customers who haven't actually lost anything. Everyone who bought a car knew what they were paying and was happy with the price when they signed.

 

[nickjdavis]

But were the customers aware of the interest rate they signed up to pay?
Yes, they must have been.
Since when is every cost and commission that we pay when buying something itemised on our paperwork?
It just seems like speculative litigation that will end up costing the future customers eventually. The finance houses won't just volunteer to make a 10 year loss to compensate past customers who haven't actually lost anything. Everyone who bought a car knew what they were paying and was happy with the price when they signed.

But whether you were happy with the price or not is irrelevant.

Most customers would reasonably think that the interest rate they were being offered was coming directly from the finance company and was pre-agreed with the dealership relative to the size of the loan that was being offered. Customers would certainly not have known that the dealer was free to choose within a set range of interest rates and push the rate (usually the highest) that earned them the most commission. This is the issue with Discretionary Commission Arrangements (which have been banned since 2021) and is possible that the FCA will set up some sort of compensation scheme to redress customers who's loans were subject to DCA's.

 

[RichA]

But whether you were happy with the price or not is irrelevant.

Most customers would reasonably think that the interest rate they were being offered was coming directly from the finance company and was pre-agreed with the dealership relative to the size of the loan that was being offered. Customers would certainly not have known that the dealer was free to choose within a set range of interest rates and push the rate (usually the highest) that earned them the most commission. This is the issue with Discretionary Commission Arrangements (which have been banned since 2021) and is possible that the FCA will set up some sort of compensation scheme to redress customers who's loans were subject to DCA's.

That would be an issue if the purchase of in-house finance when buying a car was mandatory. But it isn't.
When I've needed finance to buy a car in the last 30 years I've arranged it myself through a bank or BS.
Is there an element of buyers just wanting that new car every 3 years, seeing a payment plan they can afford and not asking too many questions?

 

[GreiginFife]

Read it all now and understand it more. Good that they have charged liability over the DCA agreements. But feel that there is still a fine line of dealers being able to claim that a DCA is still inline with looking after commercial interests and making money.

I have no skin in this particular game, my last 4 cars have been 0%, 0%, 1.5% and 2.9% so doubt there were better deals out there anyway.

 

[Deleted member 35927]

Read it all now and understand it more. Good that they have charged liability over the DCA agreements. But feel that there is still a fine line of dealers being able to claim that a DCA is still inline with looking after commercial interests and making money.

I have no skin in this particular game, my last 4 cars have been 0%, 0%, 1.5% and 2.9% so doubt there were better deals out there anyway.

I don't from a loan pov but have a chunk of Lloyds and they were potentially on the hook for many billions depending how this went. I'm just pleased its been settled, whatever way.

 

[nickjdavis]

I don't from a loan pov but have a chunk of Lloyds and they were potentially on the hook for many billions depending how this went. I'm just pleased its been settled, whatever way.

I believe that Lloyds/Black Horse Finance are still on the (smaller) hook in respect of the DCA's.

What will be interesting is seeing if the flood of spam emails (from companies who want to handle a claim that I may or may not have) now recedes following yesterdays judgement.

 

[Deleted member 35927]

I believe that Lloyds/Black Horse Finance are still on the (smaller) hook in respect of the DCA's.

What will be interesting is seeing if the flood of spam emails (from companies who want to handle a claim that I may or may not have) now recedes following yesterdays judgement.

Yes indeedy , Lloyds have set aside 1.4 billion for that I believe.
As for the ads, they were turning up on YouTube on some of the channels I watch, like TDC, where they were sponsoring videos.

 

[PNWokingham]

But were the customers aware of the interest rate they signed up to pay?
Yes, they must have been.
Since when is every cost and commission that we pay when buying something itemised on our paperwork?
It just seems like speculative litigation that will end up costing the future customers eventually. The finance houses won't just volunteer to make a 10 year loss to compensate past customers who haven't actually lost anything. Everyone who bought a car knew what they were paying and was happy with the price when they signed.

agree with all your logic. I don't care who makes what for what on any loan, mortgage etc. All the public should worry about is comparing any potential deal's APR, total payable etc (ie all the upfront details that by law need to be clear and understandable for the intended investors) and thus be able to compare with other similar delas offered by others

The regulators should be applauded for making providers provide clear terms that are understandable by the investor but similarly they have been guilty of overreach in several arears, making many things much costly to administer due to the amount of Compliance personell needed that all these costs are added to the firm and thus ultimately to the client.

I think one of the worst changes ever was making clients pay for financial advice and thus the IFAs not being able to earn commission from the Product Providers - all this did was make access to a Financial Adviser generally only available to the rich and thus Joe Bloggs is excluded. I would prefer that commision rates are clearly labled as per the strict guidelines and thus it could open up the market for Financial Advice to people who would balk at paying the upfront fees

 

[Deleted member 35927]

Lloyds up 8% today.

 

[PNWokingham]

Lloyds up 8% today.

Messaged my mate earlier who has 95% of all his investments just in Lloyds!!

 

[Deleted member 35927]

Messaged my mate earlier who has 95% of all his investments just in Lloyds!!

Ive got a reasonable chunk. Certainly been a rollercoaster .

 

[harpo_72]

I was looking at our circumstances and I was just revisiting my pension which seems to be changing providers .. I can only imagine that there is a huge amount of profit that is not making its way into my pot if they are selling them around providers.

 

[Mudball]

Stellar results from Palantr last night. Stock was up by 10%. Cramer thinks it is a $200 stock, which usually means it will tank. But it nearly hit $170 in after hours. Time to start unwinding.

One of the greatest mistakes most retail investors like me make is to cut profits early but let losses sit there.

I am up 160%, So, going to cut half my position and let’s see how far this motors on. Quids in (for a change)

 

[Deleted member 35927]

Stellar results from Palantr last night. Stock was up by 10%. Cramer thinks it is a $200 stock, which usually means it will tank. But it nearly hit $170 in after hours. Time to start unwinding.

One of the greatest mistakes most retail investors like me make is to cut profits early but let losses sit there.

I am up 160%, So, going to cut half my position and let’s see how far this motors on. Quids in (for a change)

Im at a similar spot with Lloyds, some serious gains over the years , if you've been patient now I'm wondering will they go on to 100p or should I move some across in to global equity etf plus a bond etf ready to cash in on the next taco time

 

[Mudball]

Im at a similar spot with Lloyds, some serious gains over the years , if you've been patient now I'm wondering will they go on to 100p or should I move some across in to global equity etf plus a bond etf ready to cash in on the next taco time

Dont cut your gains early... you can book profits and then let the rest run. You can put the profits to by into your equity. let the rest run, who knows where it will go. if there is another misselling scandal, then you can cut again. I wish i had cut my losses with lloyds, i have realised that i am way better with tech stocks esp US ones

Edit: just checked my lloyds.. its s up 26%... I need to find a tech multi bagger somewhere. time for some research.

 

[Deleted member 35927]

Dont cut your gains early... you can book profits and then let the rest run. You can put the profits to by into your equity. let the rest run, who knows where it will go. if there is another misselling scandal, then you can cut again. I wish i had cut my losses with lloyds, i have realised that i am way better with tech stocks esp US ones

That's what I wonder, where is the next scandal coming from.
These are in my ISA, I cashed in sipp ones and it's all just passive trackers in there now, save a block of Vodafone which I'm down on, but slowly recovering.

 

[Mudball]

That's what I wonder, where is the next scandal coming from.
These are in my ISA, I cashed in sipp ones and it's all just passive trackers in there now, save a block of Vodafone which I'm down on, but slowly recovering.

I have a JISA for my son, it is funny how compounding works. He gets a tiny amount via DD into it. but over the years, it has worked the compounding magic.
his has Fidelity US Index... up 78% and recently added Jupiter India for diversification, up 8%. All the small amount from skipping an Xbox game or a new phone, means he should be able to finish Uni without student debt... unless something seriously goes wrong.

his portfolio is doing better than mine. Simply because we dont dabble in it. it is simply add money, buy passive fund, rinse repeat. In my investments, i get in the way to keep tweaking. Simply shows that emotions are the worst enemy when it comes to investments.