No finance recorded on HPI but there actually was?

legal updates

This article might give you several “Twitchings”.

Read our disclaimer keyboard_arrow_down

This website content is intended as a general guide to law as it applies to the motor trade. Lawgistics has taken every effort to ensure that the contents are as accurate and up to date as at the date of first publication.

The laws and opinions expressed within this website may be varied as the law develops. As such we cannot accept liability for or the consequence of, any change of law, or official guidelines since publication or any misuse of the information provided.

The opinions in this website are based upon the experience of the authors and it must be recognised that only the courts and recognised tribunals can interpret the law with authority.

Examples given within the website are based on the experience of the authors and centre upon issues that commonly give rise to disputes. Each situation in practice will be different and may comprise several points commented upon.

If you have any doubt about the correct legal position you should seek further legal advice from Lawgistics or a suitably qualified solicitor. We cannot accept liability for your failure to take professional advice where it should reasonably be sought by a prudent person.

All characters are fictitious and should not be taken as referring to any person living or dead.

Use of this website shall be considered acceptance of the terms of the disclaimer presented above.

We hear it from clients every now and then.  They have taken a car in part exchange, done a HPI check on it and all is clear, no finance. 

Then, sometimes years later, a client receives a letter from a solicitors acting on behalf of a finance company alleging “conversion”.  Conversion is where a person treats and disposes of goods as if they owned them when they actually did not.  The letter will say the car has outstanding finance of thousands of pounds and, if client doesn’t pay up, they will issue court proceedings for selling a car that belonged to the finance company and not the car dealer.

Your initial response will be that it was HPI clear before it was sold.  Unfortunately, the House of Lords decision in Moorgate Mercantile Co Ltd v Twitchings 1977 – yes 1977 but still binding on lower courts – states that because there was no legal obligation for a finance company to use the register, the car dealer was nevertheless liable.  

Of course, HPI in 1977 as opposed to HPI more than 40 years later may mean that if the same case was heard again, the outcome might be different. HOWEVER, it would probably require a court of equal or superior rank to the now obsolete House of Lords – such as the Supreme Court – to change it.  This is because of the deeply entrenched legal concept that a lower court cannot overrule a judgment given in a higher ranking court when the facts are the same.

Some light relief though comes in the form of the 2014 High Court decision in Chatfield’s Martin Walter v Lombard North Central, which came to a different conclusion because the facts were slightly different.  Here, the court found against the finance company who DID note their interest in a vehicle on the HPI register but who subsequently removed their interest in error.   There is, therefore, a difference between a finance company that fails to register their interest with HPI and one which does and then alters the register by removing it.  

It might be said that the High Court was simply doing its best to find a distinguishing factor to remove an age-old legal anomaly. It might have been good law in 1977 when HPI was in its comparative infancy, as opposed to now, where it is the place that everyone goes to and relies upon when checking cars for theft, insurance write offs, and outstanding finance.

HaswentWebsites for dealers small and large

Composer is a next-gen automotive platform that has been designed from the ground up to give you an intuitive way to promote your stock. You have extensive stock management options, and you'll gain a brilliantly responsive new website to advertise your stock, starting at just £39.99/month.

Jason WilliamsLegal AdvisorRead More by this author

Related Legal Updates

Mis-selling finance claims – Ignore at your peril!

Data subject access requests and various letters quoting CONC and the Consumer Credit Act are being received requesting lots of documentation to be provided.

Distance Selling Cancellation and Rejection – A Basic Legal Lesson for Finance Companies

The finance company who buy the car, are not consumers. The regulations do not apply to buyers, who purchase “in the course of trade or business.

FCA adds to “no win, no fee” compensation culture

It was found in a FCA report that car finance consumers may have been overcharged and deceived when arranging their car finance deals.

Your business should have a written complaints procedure

All businesses regulated by the Financial Conduct Authority (FCA) must follow complaint-handling rules.

Are you ready to be Mystery Shopped?

It could be assumed the FCA will pick on the “big players” as that will have the desired impact if they need to hand out any enforcement notices for noncompliance.

Part-ex scams

A couple of members have recently fallen foul of customers scamming them over the vehicle they part-exchanged.

Consumer credit commission disclosure – have you received a letter?

Letters are being sent to our members requesting they divulge confidential information about commission that was not requested by the customer at the appropriate time.

Get in touch

Complete the form to get in touch or via our details below:

Phone
01480 455500
Address

Vinpenta House
High Causeway
Whittlesey
Peterborough
PE7 1AE

By submitting this quote you agree to our Terms & Conditions and Privacy & Cookies Policy.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.