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Motor vehicle drivers

Supreme Court Ruling Blocks Compensation for Millions of Drivers in UK Car Finance Scandal

Strategic Insights

— 1 min read

Martin Lewis, the founder of Money Saving Expert, has issued a warning to drivers following the Supreme Court's decision not to uphold the liability of lenders for hidden commission payments in car finance schemes. The ruling favors two lenders, FirstRand Bank and Close Brothers, who had challenged the Court of Appeal's decision to hold them responsible for not disclosing commission payments to motorists. An estimated 23 million people were potential beneficiaries of the compensation, but now face a blocked avenue for seeking redress. The FCA, which had intervened in the case, may still introduce a redress scheme for discretionary commission cases.

Key Takeaways:

  • The Supreme Court has ruled in favor of lenders FirstRand Bank and Close Brothers, disallowing compensation for millions of drivers who were not informed about commission payments in car finance schemes.
  • The three drivers who brought the case, Marcus Johnson, Andrew Wrench, and Amy Hopcraft, opposed the lenders' challenge, but the Supreme Court rejected their appeal.
  • An estimated 23 million people, who would have been eligible for compensation, are now blocked from seeking redress due to the Supreme Court's decision.
  • The Financial Conduct Authority (FCA) may introduce a separate redress scheme for discretionary commission cases.
  • Martin Lewis, Money Saving Expert, advises drivers to do nothing and not sign up with claims firms until further guidance is provided.
  • The estimated range for car finance refunds has been reduced to £5bn to £15bn, down from up to £45bn if the Supreme Court had upheld the original Court of Appeal decision.

Statistics:

  • 23 million people may have been eligible for compensation due to the Court of Appeal's decision.
  • 32 million car finance agreements entered into since 2007 involved a commission payment to a broker (FCA).
  • Commission payments averaged 99% of car financing agreements (FCA).
  • Close Brothers paid a commission of £183.26 to a car dealership for a single car sale.
  • FirstRand Bank paid hundreds in commission for two hire-purchase agreements.
  • Mr. Johnson paid £1,650.95 in commission for his car finance agreement.

Sources:

  • ITV News
  • Supreme Court Judgment
  • Financial Conduct Authority (FCA)
  • Court of Appeal Ruling
  • Martin Lewis' tweet on Twitter

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