posted 21st July 2026
Finance companies insist they are separate from the telecom suppliers whose deals they fund.
But documents revealing vendor screening, commission payments, inducement controls and monthly complaint monitoring raise a much more difficult question: what do the finance companies know, and why do they continue providing the money?
For years, small businesses have complained about being trapped in expensive telecom agreements that bear little resemblance to the deals they believed they had accepted.
The pattern is now depressingly familiar. A telecom salesperson promises new telephone equipment, reduced monthly bills, a contract buyout or a short-term upgrade.
The business owner believes they are entering a straightforward telecom contract, only to discover that the transaction includes a separate equipment finance agreement lasting five, six or even seven years.
Telecom suppliers must answer for the conduct of their salespeople. But there is another participant whose role has received far less attention: the finance company that provides the money.
Without finance companies funding these transactions, the sales model could not operate on anything like its present scale.
This is not simply a telephone contract.
Many business owners believe they are agreeing to purchase telephone and broadband services for a fixed monthly price. In reality, the transaction may be divided between several separate agreements:
- A telephone service agreement.
- A broadband agreement.
- An equipment finance lease.
- Maintenance or support contracts.
- Temporary contributions towards the monthly payments.
- A promised settlement or “buyout” of an existing contract.
The equipment finance agreement is frequently the longest and most expensive part of the package.
A business may believe it has accepted a two or three-year telecom deal, while the finance agreement continues for 60, 72 or 84 months. The apparently affordable monthly price may also have been supported by temporary subsidies from the telecom supplier.
When those contributions end, the customer can be left paying the full finance rental alongside service charges and other costs.
By that stage, the salesperson may have moved on, the original sales promises are disputed and the finance company insists that every remaining payment must still be made.
How the finance model rewards the telecom supplier.
Long-term equipment finance transforms a telephone sale into an immediate capital payment for the telecom supplier.The finance company purchases the equipment from the supplier and then collects monthly payments from the customer over several years. The supplier therefore receives its money near the beginning of the transaction, while the customer assumes the long-term liability. This creates an obvious commercial incentive to increase the value of the equipment package and extend the finance term.
A customer may focus on a monthly figure without being given a meaningful comparison with the normal cash price of the equipment. A package containing a small number of telephone handsets can consequently produce payments running into tens of thousands of pounds. In many finance leases, the customer does not even become the owner of the equipment after making all the primary rental payments. This is not merely a telephone bill. It is a substantial financial transaction that can outlast the useful life of the technology being financed.
The “innocent finance company” defence.
When a customer complains, the finance company will commonly argue that it did not sell the telephone system, did not provide advice and cannot be held responsible for statements made by the telecom supplier.
Finance agreements may contain provisions stating that the supplier is not the finance company’s agent. Other clauses attempt to separate the customer’s obligation to pay from any complaint about the equipment, service or sales presentation. This creates a convenient circle of avoidance.
The telecom supplier says: “Your finance agreement is with the lender.”
The finance company says: “Your complaint is about the supplier."
The customer is left in the middle, facing years of payments under a transaction they say was misrepresented from the outset.
Contractual wording is important, but it does not make the commercial relationship between the supplier and finance company irrelevant.
The real circumstances must still be examined, including how the finance was introduced, what the finance company knew about the supplier and what controls it exercised over the distribution of its products.
Propel Finance’s own documents reveal a different picture.
Documents reviewed by Meridian Legal Services provide an important insight into how one prominent asset finance provider says its vendor relationships operate.
Propel Finance’s April 2023 Consumer Duty Vendor Distribution Guide does not describe equipment suppliers as unknown third parties over which Propel has no control. It describes a structured commercial relationship involving contractual agreements, commission, onboarding, supplier checks, complaint monitoring and continuing oversight.
The guide states that Propel maintains control over information concerning its finance products, including rates, terms, amounts and APR information.
Once a customer’s information has been submitted, the customer journey follows a standard process controlled by Propel. Propel also states that it conducts Know Your Customer, Know Your Supplier and other regulatory checks before paying the equipment supplier.
Most importantly, Propel says there is a “comprehensive onboarding process” for its vendors. Vendors are screened under its onboarding policy and remain subject to ongoing monitoring.
That is not the language of a finance company dealing with an entirely independent stranger!
Hire purchase product guide
Consumer Duty Finance Lease Product Guide
Consumer Duty Price and Value Assessment
Consumer Duty Distribution Guide
Consumer Duty Distribution Guide Partnerships & Direct
Propel expressly recognises the danger of commission driven mis-selling.
One sentence in Propel’s Vendor Distribution Guide is particularly significant: “Propel recognises that commission payments may tempt vendors to mis-sell to customers.” Propel says it therefore monitors vendor activity and customer complaints carefully. This is an express recognition of the precise risk at the centre of many business telecom disputes: a supplier may be financially motivated to present the finance in a way that secures the sale rather than enables the customer to make a properly informed decision.
According to the guide, vendor commission will typically be between 1% and 5% of the amount advanced, although it may be as high as 10%. That commission is incorporated into the customer’s pricing and paid to the vendor monthly.
Propel’s Finance Lease Product Guide also acknowledges that the agreement may state that commission has been paid without disclosing the amount to the customer.
It further recognises that regulated finance leases are not required to display an APR, making them more difficult to compare. Propel says the monthly rental may include additional factors such as commission and may therefore not provide a direct like-for-like comparison.
These are not insignificant details. They go directly to whether the customer understood the true cost of the transaction and the financial incentive received by the business presenting it.
What did the finance company know about inducements?
Business telecom packages are frequently sold using contributions, subsidies, cashback or promises to meet the cost of an existing contract.
These inducements can make a long-term finance agreement initially appear affordable. But when the payments stop, the customer remains liable for the underlying finance rentals.
Propel’s Vendor Distribution Guide states that if its finance product is offered with an inducement such as a cashback arrangement, this should happen only after consultation with and “explicit agreement” from Propel.
That raises an important evidential question.
- If a telecom supplier used subsidies, contributions or cashback to support the customer’s payments, was the finance company told?
- Did it approve the arrangement?
- Did it examine whether the customer understood that the contribution was temporary but the finance liability was not?
If the inducement was disclosed and approved, the finance company may find it difficult to argue that it knew nothing about the structure of the overall transaction. If it was not disclosed, that raises questions about the effectiveness of the vendor screening and monthly monitoring that the finance company says it conducts.
Either answer requires proper investigation.
Complaints are supposedly monitored every month.
Propel’s documents say vendor performance is monitored monthly. That assessment expressly includes complaints data and customer insights to establish whether finance products have been adequately explained and whether any “distortion or inducements” affected the customer’s decision.
Where concerns arise, Propel says it can:
- Investigate the issue.
- Require the vendor to provide a remedy.
- Restrict the vendor’s access to its finance products.
- Terminate the trading relationship if problems persist.
Significantly, the document says restrictions may be applied to regulated and unregulated products.
This creates a central question for every case involving repeated complaints about the same telecom supplier:
What did the finance company’s monthly monitoring reveal, and what action did it take?
If customers repeatedly complained about being told that an agreement was shorter than it really was, that the equipment was free, that old contracts would be bought out or that contributions would cover the cost, those complaints should have appeared within the monitoring process.
- How many similar complaints did the finance company receive?
- When did it first identify a pattern?
- Was the supplier investigated?
- Was its access restricted?
- Were previous customers contacted?
- Or did the finance company continue approving and funding substantially similar agreements?
The finance company cannot claim that vendors are comprehensively screened and carefully monitored when agreements are being generated, only to treat them as complete strangers when customers complain.
Who was responsible for establishing fair value?
Propel’s April 2023 Price and Value Assessment concludes that its hire-purchase and finance-lease products provide fair value.
The document says that interest will typically range from 5% to 20% APR, depending on the distribution channel and the security of the underlying asset. For smaller transactions, the rate may reach 30%, with higher rates capable of being approved exceptionally. However, interest is only one part of the fair-value question.
In a business telecom transaction, the finance company is purchasing specific equipment from the supplier. It receives an invoice identifying the assets and obtains legal title to them.
It should therefore be possible to ask:
- What was the ordinary market value of the equipment?
- Was the supplier’s invoice proportionate to that value?
- How long was the equipment reasonably expected to remain useful?
- Was a seven-year commitment suitable for technology that might become obsolete much sooner?
- How much commission was incorporated into the customer’s payments?
- What did the customer ultimately pay compared with the equipment’s cash price?
- What checks were conducted to verify that the equipment actually existed, had been installed and was correctly valued?
A generic assessment of interest rates does not necessarily demonstrate that an individual telecom transaction represented fair value.
If a customer is required to pay tens of thousands of pounds for a small number of handsets worth a fraction of that amount, the overall economics of the transaction require scrutiny.
The finance company owned the equipment.
The suggestion that the suitability and value of the equipment were solely matters for the customer also deserves examination.
Under a finance lease, the finance company ordinarily purchases the equipment and retains legal title to it. The customer pays for the right to use that equipment.
Propel’s own guide confirms that it obtains title to the asset, directly through the supplier’s invoice or through another approved transaction structure.
The finance company is therefore not lending an undefined sum of money for the customer to spend as it chooses. It is acquiring identified assets from an approved supplier and creating a finance agreement based upon that acquisition.
Where the asset is substantially overvalued, unsuitable or bundled into a transaction the customer did not understand, it is reasonable to question what supplier and asset checks were performed before the money was released.
“Know Your Supplier” should mean more than confirming that the supplier exists.
It should include understanding what the supplier sells, how it sells it and whether its invoices bear a reasonable relationship to the assets being financed.
A signature does not prove informed consent.
Finance companies frequently rely on the fact that the customer electronically signed the agreement. But a signature proves only that the document was signed. It does not establish what the customer was told before signing or whether the overall transaction was presented honestly. A business owner may sign a lengthy electronic document during a pressured sales meeting while relying upon representations that:
- The agreement will last only two or three years.
- The equipment is free or heavily subsidised.
- The supplier will buy out an existing contract.
- The monthly price represents the complete cost.
- The customer will be upgraded before the finance term becomes relevant.
- The finance document is merely administrative paperwork.
- The supplier will remain responsible for making the payments.
A scripted verification call is not necessarily enough to resolve those concerns. Asking whether the customer signed an 84-month agreement is different from testing whether they understood that it created an independent seven-year liability that could continue even if the telecom supplier stopped contributing or ceased trading.
Genuine customer verification should establish understanding, not simply generate a recording that can later be used to defend the agreement.
What happens when the telecom supplier fails?
The unfairness becomes particularly visible when the telecom supplier enters liquidation or stops providing effective support. The supplier may no longer provide the promised service, contributions, contract management or technical assistance. The customer may be left with obsolete equipment and a substantial claim against an insolvent company.
The finance company, however, may continue collecting every rental payment. It may argue that the finance agreement is independent and that the customer must pursue the failed supplier. In practice, that supposed remedy may be worthless. The finance company retains the benefit of the long-term payment stream. The customer retains the liability and the loss.
That may be the allocation of risk the finance agreement attempts to create. It does not mean the original sale, the supplier relationship, the finance company’s knowledge or the fairness of enforcing the agreement are beyond challenge.
Unregulated does not mean unquestionable.
Many business telecom finance agreements are described as unregulated. Whether an agreement benefits from Consumer Credit Act protection depends on factors including the customer’s legal identity, the amount involved, its purpose and the contractual structure. Limited companies will often find themselves outside protections that may be available to individuals, sole traders or small partnerships. But an unregulated agreement is not automatically immune from legal challenge. Questions may still arise concerning misrepresentation, incorporation of terms, agency, contractual construction, mistake, enforceability, supplier performance and the wider relationship between the parties. Significantly, Propel’s own monitoring guide says it may restrict a problematic vendor’s access to both regulated and unregulated products. The finance provider therefore recognises that concerns about vendor conduct and customer outcomes are not necessarily confined to regulated agreements.
Finance companies must disclose what their monitoring revealed.
Where a finance company claims to screen and monitor the supplier, the records produced by that process may become highly relevant to a dispute. Those records may include:
- Vendor onboarding and due-diligence documents.
- Know Your Supplier checks.
- Trading agreements.
- Commission arrangements.
- Complaint volumes and complaint categories.
- Monthly vendor-monitoring reports.
- Compliance reviews.
- Records of concerns, remedial action or escalation.
- Approval of marketing materials and financial promotions.
- Approval or knowledge of subsidies, cashback or other inducements.
- Equipment invoices and asset valuations.
- Decisions to continue, restrict or terminate the supplier relationship.
If the finance company’s stated controls were operating properly, those records should help establish what it knew and when it knew it. If the records reveal repeated warning signs, the finance company may have serious questions to answer.
If no meaningful records exist, that raises a different question: was the promised screening and monitoring actually carried out?
Finance companies are not merely standing behind the sale.
The evidence presents a commercial structure far removed from the image of an innocent lender accidentally caught in a dispute between a supplier and its customer. The finance company:
- Approves and contracts with the vendor.
- Controls the terms of its finance product.
- Provides the system through which applications are submitted.
- Makes the credit decision.
- Conducts supplier checks.
- Reviews the equipment invoice.
- Purchases and owns the equipment.
- Pays the supplier.
- Pays or funds the vendor’s commission.
- Monitors complaints and customer outcomes.
- Can restrict or terminate the supplier’s access to funding.
- Collects payments from the customer for several years.
That does not make a finance company automatically liable for every disputed sales conversation. But neither is it a passive outsider. Its funding turns the telecom supplier’s sales promises into an immediate payment and the customer’s long-term liability.
Where finance companies continued funding suppliers despite repeated complaints, questionable inducements, unexplained commission and obvious concerns about equipment value, they may have done more than finance the transaction. They may have helped to sustain the very sales model that caused the harm.
Trapped in a business telecom finance agreement?
Meridian Legal Services helps businesses investigate and challenge mis-sold telecom contracts and associated equipment finance agreements. If you were promised a shorter contract, told the equipment was free, assured that an existing agreement would be bought out or left with years of finance payments you did not properly understand, contact us for a free initial review.
We examine the entire transaction, including the sales presentation, telecom contract, finance agreement, equipment value, commission, promised contributions and the relationship between the supplier and finance company.
If you wish to begin the legal process of cancelling your existing telecom agreement and finance, get in touch.
