You have acquired a vehicle that is the subject of an outstanding finance agreement about which you were unaware. Commonly, this occurs when a previous keeper/owner bought the vehicle on finance, having obtained a loan, but did not settle the agreement when selling the vehicle.
However, in some cases, the agreement may have been settled and the finance company simply overlooked deleting their interest.
But there are occasions when, even having undertaken a pre-purchase enquiry of the VRM, a ‘Vehicle Provenance Check’ (VPC), that returns ‘no finance company interest’, there is in fact a loan associated with the vehicle! This may occur when an interest is inadvertently removed or where the finance company has not advised all VPC companies of their interest.
Should VPC’s have received the finance interest notification? Examples of on line reference to the data sharing appear below; however, it should be noted this is not a compulsory scheme.
Current FLA material
The FLA says its Best Practice on Asset Registration was agreed by the Asset Data and Registration Group and sets out how members should register and protect secured financial interests with each MARS provider: Auto Trader, cap hpi, CDL and Experian. The detailed document is for members-only
FLA Lending Code 2021 – public copy
Clause 2G.4 (page 36) expressly refers lenders to the Best Practice and requires them to ensure their interest is registered on the asset registers of each FLA Motor Asset Registration Services member – the FLA Lending Code 2021 – ‘setting standards, creating transparency’. Moneybarn:
- We will make sure that ownership of the vehicle is properly registered and will refer to the FLA Best Practice on Asset Registration. We will in particular ensure that our interest in the vehicle is registered on the asset registers held by each of the FLA’s Motor Asset Registration Services* members.
*MARS
SAF/FLA training material
This explains the underlying Best Practice is non-binding, but that for FLA-member lenders the Lending Code makes registration with each primary agency a requirement. It names:
- cap hpi,
- CDL,
- Experian and
- AutoTrader
‘For lenders who are members of the FLA it is now a requirement under the Lending Code for them to register their vehicle financial interests with each of the primary asset registration agencies (currently cap hpi, CDL, Experian and AutoTrader).’
Law Commission, citing the actual 2016 FLA Best Practice
‘Adequate Data Sharing – page 102, para. 5.34:
‘We have been told that asset finance registers currently share data according to the Finance & Leasing Association’s Best Practice on Asset Registration.102 Pursuant to this guidance, which is not binding, data received by one register by 6 pm will be made available to the other registers the same day and should be reflected on all registers by 8 am the following morning.103 This causes an inevitable delay and a period of time during which the asset finance registers may hold inconsistent information.‘
Secure Trust Bank / Moneyway
Shows what a lender actually does: it supplies the VRM, vehicle details, account number, agreement type, date and term to all four MARS companies to record its interest:
for vehicle finance, we pass the vehicle registration number, details of the vehicle and the account number, agreement type, date and term to four firms providing motor asset registration services to record our interest in the vehicle. These firms are
Solera cap hpi Limited,
Experian Limited,
CDL Vehicle Information Services Limited and
Auto Trader Limited.
They maintain a register of lenders with hire purchase agreements related to vehicles. Solera cap hpi Limited also provide services to the motor industry on new car pricing and specifications, used car valuations, predicted maintenance costs and market analysis. For more information on how these firms process your information, please visit their privacy information.
Zopa
3. Sharing your information
‘We use and work with a range of third parties as part of running our business. This means that we will share your information with them and they may share your information with us. These third parties include:’
‘motor asset registration services (such as Experian, CDL, AutoTrader and HPI) to advise them of our ongoing financial interest in vehicles we’ve financed for our auto loan customers, so that other participants in the motor industry, including finance providers and consumers can see that we have an interest secured against the vehicle’
The 2021 FLA Lending Code is especially useful because this is not somebody’s interpretation of good practice. The Code says that the lender should:
- “ensure that our interest in the vehicle is registered on the asset registers held by each” MARS member.
Remarks:
The publicly hosted Moneybarn copy also contains, in its resource section, a direct link to the then-current document entitled “FLA Best Practice on Asset Registration – April 2021.” However, the document is behind an account log-in.
The Law Commission material is particularly valuable and may be the closest thing to a publicly available extract from the actual Best Practice document. In its work on bills of sale/vehicle finance, the Law Commission expressly cites:
- “FLA Best Practice on Asset Registration (August 2016)”
It explains that under that guidance, information supplied to one asset-finance register by 6pm was made available through the registration system so that it should be reflected across all the registers by 8am the following morning.
Law Commission document citing FLA Best Practice paragraph 6.10
This appears to demonstrate that the FLA guidance was concerned not simply with whether an interest was registered, but with the timeliness and propagation of that information between vehicle-finance registers.
SAF, which is closely associated with the FLA’s motor-finance training, presently says that registration is voluntary as a matter of general law, but then distinguishes the position of FLA members:
- “For lenders who are members of the FLA it is now a requirement under the Lending Code…”
It would be too strong to say simply that every finance company is legally required to put a marker on HPI immediately. The public material says otherwise. But for an FLA-member lender, there seems to be a quite respectable evidential chain showing that the industry standard is:
- register the financial interest;
- register it with every MARS provider;
- maintain accurate and current information; and
- operate processes designed to ensure that the information propagates through the vehicle-data ecosystem.
When a purchaser obtains a provenance check showing no outstanding finance, but finance subsequently emerges, was the finance:
- never registered,
- registered late,
- registered incorrectly,
- supplied to only part of the market, or
- lost/delayed somewhere between the lender and the provenance providers?
The FLA standards suggest that they should be capable of being investigated rather than simply leaving the innocent purchaser to deal with the consequences.