The motor trade should beware buying "finance free" Fiats, Alfas, Land Rovers, Jags and Jeeps as Fiat's finance house FGA Capital, which handles new and late-used for these marques seems to have failed to record its credit agreements...

After failing to lodge records with vehicle check agencies Fiat finance house FGA Capital UK Ltd, which also provides finance for Land Rover, Jaguar and Chrysler-Jeep is using 34-year-old case law to sue dealers who innocently buy their "finance clear" second hand cars

FGA Capital UK Ltd, the finance house jointly owned by Fiat and a French bank is suing car dealers who have innocently bought vehicles marked "finance free" - even though it admits negligence in never recording their having financed the car with the standard "vehicle check" agencies HPI or Experian.

The "clean skin" vehicles were predominantly sold as new and late-model used but are not restricted to Fiat: FGA Capital UK Ltd are the main provider of finance for Fiat, Alfa, Land Rover, Jaguar and Chrysler-Jeep.

No one at FGA Capital knows the number of cars involved and the firm will not state the dates during which the failure took place. It is not clear whether the failure to register the interest involved internal or external fraud or resulted from a system or systemic failure.

What is clear is that no record of the finance was made on the standard vehicle check registers, HPI or Experian, at the time the agreements were raised and it is possible that many vehicles may have been innocently purchased by dealers who now face being pursued by FGA Capital's solicitors.

Furthermore the claim being made often bears no relation to the purchase or sale price of the car - it will be usually be for much more as it relates to the amount of finance outstanding.

One such dealership, Evo Motors of Calne in Wiltshire, bought a Fiat Punto in March 2010 for £4995 and moved it on at a small profit.

FGA Capital UK's solicitors Chafes are claiming £7445.99, plus interest at 8% plus legal costs of up to £5000 despite FGA not recording any interest in the vehicle with Experian until May 2010, two years after the credit agreement was taken out (in May 2008) and two months after the Evo Motors had already bought and sold it.

Chafes allege "wrongful conversion" against Evo stating that their client Fiat is not required to lodge an interest in the car and citing 1977 Case law, Moorgate Mercantile -v- Twitchings as their grounds whereby it was found that negligence in failing to record an interest in the car affords the dealer no defence.

Once the car is sold the new private purchaser has "good title" as an "innocent purchaser" but no such defence is afforded the dealer - and consequently Fiat are taking the line of "least resistance" and making their claim against the dealer rather than their fraudulent customer who sold the car - who is now being pursued by the police.

It is Dealer Club's view that the world has very much moved on since 1977 and that vehicle checks are central to the entire second hand car business and core to dealer requirements under the Consumer Protection Regulations.

We will be challenging Fiat in court, and long term, we would like to see logging of any financial interest in the car to be required as a statutory duty.

In the meantime however if you have bought and sold, or are being offered a finance-free Fiat, Alfa, Ferrari, Land Rover, Jaguar or Chrysler Jeep be very wary in case Chafes and Fiat Finance come calling. And let me know if they do...

Edited by LucyBC on 21/02/2011 at 07:06