Close Brothers challenges landmark ruling in UK Supreme Court

In the United Kingdom, Close Brothers was granted permission by the Supreme Court to appeal a significant ruling regarding car finance mis-selling. This ruling declared it unlawful for car dealers to receive commission from lenders without the customer's informed consent, a decision that emerged from proceedings in October. The ruling has raised concerns across the motor finance industry, as major banking groups could potentially face billions in compensation to consumers who may have been mis-sold. The Financial Conduct Authority has been investigating practices related to discretionary commission arrangements that allowed dealers to impose higher interest rates without proper disclosure to customers. Following the October ruling, Close Brothers temporarily paused new motor finance lending but resumed activities last month, stating that they had restarted a significant portion of their business operations. The regulator expressed support for the swift decision by the Supreme Court to hear the appeal, highlighting the potential impacts on the motor finance market and the consumer base reliant on it. The director of motor finance at the Finance & Leasing Association praised the expedited process, which is expected to bring much-needed certainty to the sector amidst a prolonged crisis looming over motor finance due to these legal developments. This situation illustrates the balancing act between financial practices in the sector and regulatory oversight aiming to protect consumers from potential misconduct in financial agreements.