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4w ago

UK Supreme Court to Hear Landmark Case on Undisclosed Car Loan Commissions

Banks face potential compensation costs up to £44 billion as hearings begin April 1, with the Financial Conduct Authority prepared to propose a redress scheme if earlier rulings are upheld.

Banks may have to pay out tens of billions of pounds in compensation for controversial car loans
The Supreme Court begins a three-day hearing into issues at the heart of the car loans controversy next Tuesday
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Overview

  • The Supreme Court will review three linked appeals, including cases against FirstRand and Close Brothers, to determine the legality of undisclosed car loan commissions.
  • The hearings follow an October 2024 Court of Appeal ruling that such commissions were unlawful without informed consumer consent, raising concerns across the financial sector.
  • Major lenders, including Lloyds, Close Brothers, and Santander, have collectively reserved over £1.5 billion for potential compensation claims.
  • Consumer advocacy group Which! estimates compensation costs could range from £16 billion to £44 billion, rivaling the scale of the Payment Protection Insurance (PPI) scandal.
  • The Financial Conduct Authority has pledged to consult on a compensation scheme within six weeks if the Supreme Court upholds the Court of Appeal's decision.