Car finance mis-selling scandal: Millions of drivers denied payouts after Supreme Court ruling
The Supreme Court decided that lenders were not responsible for the payment of secret commission in vehicle financing plans and rejected millions of drivers.
The two lenders, the Firstrand Bank and Close Brothers, as part of the financial regulations made before 2021, paid the “secret” commission payments paid by buyers to automobile vendors, the driver’s completely informed consent was illegal.
The Supreme Court’s decision means that most of the allegations will not continue, and leave the door only in compensation for the most serious cases.
If the experts did not fully proper the decision of the Supreme Court, instead of £ 45 billion, a payment similar to the PPI scandal is expected to compensation between £ 5 and £ 15 billion instead of £ 5 billion.
Following the decision, lawyers said that consumers who pay large commissions could still expect compensation.
“This is an important decision for lenders and dealers.
“As we have guessed, the Supreme Court determine that dealers do not owe trust and confidence in organizing vehicle financing for their customers, while the decision opens a gateway for consumers to bring demand in accordance with the Consumer Loan Law, which is particularly paid and the relationship is unfair.
“FCA is expected to bring correction in cases where we expect to learn more than the FCA about this correction plan in the next six weeks.”
In October last year, the decision of the three drivers who bought their cars before 2021, should receive compensation after not being said clearly enough, or to buy a commission to promote the business to the car vendors acting as a credit broker.
However, for the lenders, lawyers told the Supreme Court at a three -day hearing in April that the decision was a “terrible mistake .. The financial behavior authority, which intervened in the case, claimed that the decision was “too far”.
Three drivers Marcus Johnson, Andrew Wrench and Amy Hopcraft opposed the challenge.
Bobby Dean MP, a member of the Treasury Committee, said, “Today is a good day for the consumer and a good day for the sector where honesty is important.
“Rip-off scale is really shocking. Some people pay more than thousands of pounds. To ensure that people get the compensation they owe are now in the government and the regulator.”
The Treasury said that it will now work with regulators and industry to understand the effect of both companies and consumers ”.
Lord Reed, who gave a summary of the long -awaited Supreme Court Decision on Friday and heard the case, said, “For detailed reasons stated in a decision published today, the Supreme Court allows the appeals brought by financial companies.”
Following the decision, Martin Lewis called on the drivers to request a request or not to rush to register with request companies: “My doubt [Financial Conduct Authority] With Will weeks, announce a consultation on a correction plan for optional commission cases. It may not even have to claim it, it may be automatic. And I suspect that there will be more guidance at a similar time with extreme commissions.
“If you register with a request company now, you may need to give a cut even if it doesn’t do anything. So sit in your hands for now.”
“My assumption/guess, this means that the Supreme Court will be in the range of £ 5 billion to £ 15 billion instead of 45 billion pounds. He approved all of them ”.
In a letter to the Supreme Court in December last year, FCA, almost 99 percent of the financial agreement entered since 2007, almost 99 percent of a broker, said the commission payment.
Mr. Johnson, Mr. Wrench and Mrs. Hopcraft used automobile vendors for automobile financing for second -hand cars, all of which were lower than 10,000 £, before January 2021.
In any case, only one finance option was offered to drivers, automobile vendors make profit from the sale of the car and receive commission from the lender.
The commission paid to the dealers was affected by the loan interest rate.
The programs were banned by FCA in 2021 and three drivers were legally legally processed between 2022 and 2023.
After the allegations reached the appeal court, three senior judges decided that the lenders were obliged to pay the commission back to the drivers due to lack of explanation about payments.
Lady Justice Andrews, Lord Justice Birss and Lord Justice Edis said that although every case is different last year, it would not be enough to bury such an expression on the small pressure that the debtor is unlikely to read ”.
Treasury spokesman said: “We respect this decision from the Supreme Court, and now we will work with regulators and industry to understand the effect of both companies and consumers.
“We accept the issues emphasized by this court case. So we already make significant changes in the Financial Ombudsman Service and Consumer Loan Law. These reforms will provide customers a fair and clear sale, while it will provide a more consistent and predictable regulatory environment for businesses and consumers.”
