UK Supreme Court Gives Banks Partial Win on Car Finance Commissions

Financial Times: The UK's highest court has partially overturned a landmark motor finance judgment that threatened to leave banks on the hook for tens of billions of pounds in compensation for allegedly deceiving consumers with hidden commissions on car loans.

The Supreme Court's decision has been keenly awaited by investors as well as millions of consumers who were poised to claim redress from the banks. The government has been considering legislation to limit the fallout. The controversy over car finance shot to prominence after a bombshell Court of Appeal judgment in October that awarded compensation to three people who claimed they were misled by banks concealing the payment of commissions to dealerships. The $58.3 billion car finance scandal centers on hidden commissions paid by lenders to car dealers who arranged loans without disclosing the payment amounts and terms to borrowers. Under discretionary commission arrangements, dealers received larger payments when they persuaded car buyers to accept higher interest rates on loans. The practice affected roughly 90% of new car purchases and many secondhand vehicles, potentially exposing millions of motorists to mis-selling.

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