Supreme Court Ruling Could Trigger Massive Compensation in Car Finance Sector
Britain's Supreme Court is set to make a landmark decision on car finance commissions, potentially leading to billions in compensation claims against lenders. Finance giants like Lloyds, Close Brothers, and Barclays have already reserved funds for potential payouts. The ruling could impact over 2 million car finance consumers annually.
In a pivotal decision anticipated this Friday, Britain's Supreme Court will unveil a judgment on car finance commissions, with the potential to unleash consumer claims amounting to billions against financial institutions. The ruling is slated for release post-market hours in London.
The case revisits a prior Court of Appeal decision that deemed it illegal for lenders to pay commissions to motor dealers without informed customer consent. Major lenders including Lloyds Banking Group, Close Brothers, Barclays, and other UK arms of Santander and Bank of Ireland have collectively allocated nearly £2 billion to address possible claims.
The Financial Conduct Authority (FCA) banned discretionary motor finance commissions in 2021, but allegations of unfair treatment before the ban have led to an FCA probe. Depending on the Supreme Court's verdict, a consultation on compensation frameworks is expected within six weeks, affecting millions in the motor finance sector.
(With inputs from agencies.)
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