UK Supreme Court Eases Banks' Fears with Car Finance Ruling
The UK's Supreme Court overturned a previous ruling concerning car finance commissions, providing relief to banks. The court decided that car dealers are not fiduciaries to customers when arranging finance, which contrasts with the previous judgment that worried the motor finance industry.
The United Kingdom's Supreme Court has withdrawn a landmark decision concerning car finance commissions, alleviating banks' concerns over potential redress schemes. The reversal follows an appeal by two lenders, marking a significant shift in responsibilities and liabilities within the motor finance sector.
Supreme Court President Robert Reed declared that car dealers engaging in vehicle sales and financing arrangements do not hold fiduciary responsibilities towards customers. This overturns a previous Court of Appeal verdict that had sent tremors through the motor finance industry by implying extensive dealer duties.
Reed criticized the earlier ruling for misunderstanding the commercial dynamics between customers, dealers, and finance companies, reinforcing the autonomy of dealers in financial arrangements.
(With inputs from agencies.)
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