A three-day hearing which opened yesterday in the Supreme Court against two lenders Close Brothers and FirstRand Bank (MotoNovo) is set to challenge the decision of the Court of Appeal that a car finance broker could not lawfully receive a lender’s commission without first obtaining the customer’s full informed consent.
The Court found that three motorists, who had all bought their cars before 2021, had not either been told or not told clearly enough that the car dealers involved would receive a commission from the lenders for introducing business to them.
The two lenders are now challenging that ruling and the three-day hearing is expected to centre on whether car dealers owe duties as credit brokers to provide information to consumers, and if so whether that makes any commission “secret” so as to make lenders liable to customers.
There are high stakes at play with Close Brothers and FirstRand having set aside 165 and 140 million pounds respectively to cover potential claims.
If the Supreme Court dismisses the lenders’ appeals this may also have an effect on other businesses that provide credit through commission-earning intermediaries.
The Financial Conduct Authority (FCA) has said that it would confirm within six weeks of the decision whether to press ahead with a redress scheme as an alternative to consumers having to sue finance companies.
With this potentially being one of the UK’s most costly financial redress schemes since payment protection insurance, this ruling could cause a shockwave in both the motor and legal industry alike.
Here at Box Legal we can arrange After the Event Insurance for financial mis-selling claims so if you are representing claimants in car finance claims, do get in touch to find out more about our Claimsafe After the Event Insurance.
