Supreme Court ruling may entitle millions to car finance compensation
- A Supreme Court ruling on car finance mis-selling could affect millions of motorists.
- Almost 99% of car finance agreements since 2007 included undisclosed commission payments.
- The outcome may lead to a compensation scheme overseen by the FCA.
In the United Kingdom, a significant Supreme Court ruling is taking place today, which follows an October 2023 Court of Appeal decision. The current case examines practices surrounding commission payments made to car dealers involved in finance arrangements prior to 2021. The situation arose after three claimants asserted they were unaware of 'secret' commissions paid to dealers, arguing that such practices were unlawful. The initial ruling stated that motorists lacked informed consent regarding these payments, highlighting a potentially widespread issue within the car finance industry. The Financial Conduct Authority (FCA) has emphasized that nearly 99% of the approximately 32 million car finance agreements entered into since 2007 involved commission payments to brokers. This raises concerns about consumer protection and the legitimacy of the agreements made over many years. Accepting the appeal brought by lenders FirstRand Bank and Close Brothers, the Supreme Court is expected to deliver a verdict that will significantly affect these practices and the subsequent financial obligations of the involved parties. Following the Supreme Court’s historical judgment, the FCA will determine if there was widespread consumer harm due to these commission payments. If they conclude that consumers were misled, the FCA may initiate an industry-wide redress scheme, potentially compensating those who were affected. This ruling and subsequent FCA actions will shape the future of the automotive finance sector by clarifying consumer rights and obligations related to finance contracts. This verdict may set a precedent that improves transparency in the motor finance sector, prompting much-needed reforms. Motorists who suspect they may have been mis-sold or inadequately informed about their finance agreements are advised to stay aware of the outcome, as they could be eligible for compensation if the ruling supports their claims. As the legal landscape is set to change dramatically based on today's ruling, millions are waiting for the implications that will unfold.