UK Supreme Court Ruling Eases Fears in Car Finance Sector

The UK's Supreme Court has overturned a pivotal ruling on car finance commissions that had previously ignited concerns of a costly redress scheme among banks. The decision, made public on Friday, reassured financial institutions that car dealers do not hold fiduciary duties to customers, thus limiting lenders' liabilities for commissions.

This reversal is significant, as banks had feared immense costs stemming from compensation, reminiscent of the historic payment protection insurance scandal. With this judgment, institutions like Close Brothers and Lloyds witnessed an upturn in their shares, reflecting market relief.

Though some overcharging claims may persist under a different compensation scheme, the Financial Conduct Authority anticipates consulting on these matters shortly. The finance ministry plans to collaborate with regulators to gauge implications for firms and consumers, ensuring the financial services sector remains robust.

(With inputs from agencies.)