Millions of UK motorists are unable to claim compensation for hidden commissions paid on car loans after a recent Supreme Court ruling. The court sided with finance companies in two out of three test cases, overturning earlier rulings that allowed large-scale compensation claims.
However, some drivers who took out specific types of finance deals may still be eligible for payouts. The UK’s financial regulator is considering a compensation scheme and says it will “take time to digest the judgement”.
The Supreme Court heard three joint appeals from two lenders, FirstRand bank and Close Brothers. They challenged a ruling that found it unlawful for car dealers to receive hidden commissions when signing customers up for motor finance before 2021.
The court ruled against one lender but awarded compensation to another, Marcus Johnson. Johnson’s case involved significant commission payments – 55% of the total charge or credit – which the court deemed unfair.
While the scope of industry-wide claims has been narrowed, about four in 10 cars sold before 2021 were sold through banned methods such as discretionary commission arrangements. The Financial Conduct Authority (FCA) is investigating complaints and may introduce a compensation scheme for affected motorists.
Expert Richard Barnwell predicts that some drivers could qualify for redress worth £5-£13 billion. Martin Lewis, founder of Money Saving Expert, believes compensation payments could total £10bn.
Source: https://www.bbc.com/news/articles/cj9w0dj0yjyo