UK Supreme Court Expected to Decide Multibillion-Pound Car Finance Compensation

The UK Supreme Court is set to deliver a landmark ruling on car finance commissions that could force major banks and finance firms to pay multibillion-pound compensation to motorists. The case centers on whether car dealers, acting as credit brokers, must obtain fully informed consent from customers for commission payments from lenders, which were often undisclosed and linked to higher interest rates. Major lenders such as Lloyds, Close Brothers, Barclays, and FirstRand are bracing for potential payouts, with Lloyds alone having set aside over £1 billion in anticipation. The Financial Conduct Authority (FCA) has intervened, arguing the Court of Appeal ruling went too far but is also considering a redress scheme that could cost the industry tens of billions of pounds. This ruling could affect millions of car finance agreements dating back to 2007, with comparisons drawn to the payment protection insurance (PPI) scandal in terms of the scale of compensation. The Supreme Court's decision is highly anticipated as it will clarify transparency obligations in the motor finance market and potentially reshape consumer protections and lender liabilities.