Credit, Collections & Insolvency News
This week, the UK’s Supreme Court will hear a pivotal case regarding potential compensation for millions of motorists affected by unlawful hidden commission payments in the car finance sector. Following a Court of Appeal ruling that deemed such payments illegal without buyer consent, lenders, including major banks, have set aside substantial funds for claims that could reach hundreds of pounds per individual. The Financial Conduct Authority (FCA) has received numerous complaints, and while the Supreme Court’s decision is awaited, the FCA is considering a compensation scheme for affected drivers.
Analysts have been trying to quantify the potential impact on the sector, but have also noted a separate recent case involving commissions to a broker for arranging a deal for electricity supply. The outcome of that case is being seen as potentially positive as a read across to the outcome of the Supreme Court case.
Brian Nimmo, Head of Redress at Broadstone said “The Supreme Court’s decision will have major ramifications for the financial services market and could kickstart one of the largest and costliest redress schemes since PPI.
“While the final judgement is not expected until the summer, banks have already set aside billions of pounds for possible compensation payments. It is set to be a landmark ruling with far-reaching legal and financial consequences.
“The FCA has already said that if customers are found to have lost out based on widespread failings by firms then it would consult on an industry-wide redress scheme to avoid an individual case-by-case approach and provide a consistent framework for compensating consumers.”