A UK court is set to deliver a crucial ruling on whether millions of motorists are entitled to compensation for hidden commission payments made by car finance lenders. The decision could lead to payouts running into billions of pounds, with estimates suggesting drivers could receive up to £1,000 each.
The case centers around the payment of commissions to dealers by lenders, which is now being challenged by regulators and consumers. A Court of Appeal ruling last year found that these payments were unlawful unless customers gave their explicit consent. The Supreme Court will now hear the appeal and deliver a verdict expected in the summer.
Lenders, including major banks, have set aside funds for potential compensation claims, with some arguing they did nothing wrong. However, consumer advocates say the industry’s opaque practices led to drivers being charged high interest rates without realizing it.
The Financial Conduct Authority (FCA) has received thousands of complaints about mis-selling by dealers and lenders. If the Supreme Court agrees with the appeal, it could lead to a compensation scheme worth tens of billions of pounds. The FCA is considering setting up such a scheme for drivers who had discretionary commission arrangements before their ban in 2021.
The ruling’s impact on the car finance sector and consumers will be significant, with some warning that it could disrupt the market. However, others see it as a long-overdue correction to an industry plagued by hidden fees and unfair practices.
Source: https://www.bbc.com/news/articles/cdjyjyx9kpro