The UK Supreme Court grants banks that retract car financing committees

The highest court in the United Kingdom has led to the effect of the historic car financing ruling that threatened to leave banks on a hook for tens of billions of pounds as compensation due to the deception of consumers with hidden currencies on car loans.

On Friday, the Supreme Court ruled that car dealers do not owe a “credit duty” to their customers, which reflects a central part of the Court of Appeal in the bomb bomb last year that sent shock waves across the banking sector in the United Kingdom.

The ruling, which was delivered after the closure of the stock market in London, raised shares listed in the United States in British banks, and also led to relief to the UK Treasury, which was studying legislation to contain financial damage to the lenders.

However, on Friday evening, lawyers were holding the details of the accurate ruling, which consumer groups still left the door open to compensation for billions of pounds about car loans.

“This ruling does not allow lenders to stop the hook,” said Alex Neil. “Billions of pounds are still due to consumers who have fairly interest rates or have more excessive fees.”

Unanimously, a committee of five of the Supreme Court judges found that the lower court had made a mistake in concluding that the merchants owe “unqualified loyalty” to customers when the financing arranged for them.

Lord Reed, President of the Supreme Court, said that no one “could not expect reasonably” that car agents were doing anything other than “representation in their commercial interests.”

However, while the court upheld the appeal of the banks on two of the three cases that occur, it stood with the factory supervisor in Wales in part of his case against Motunovo’s financial, which is part of the Ferstand Bank in South Africa.

The ruling has been strongly waiting for investors, as well as millions of consumers who were ready to demand compensation from Banks.

The Financial Conduct Authority said after the ruling that it would announce by Monday whether it would be imposed on the scale Recovery To compensate for auto financing customers.

“We want to bring more certainty to consumers, companies and investors as soon as possible,” said the Supervisory Authority.

Stephen Haddrill, Director General of the Finance and Leasing Association, which represents the auto financing industry, said the ruling “regained certainty and clarity” to the UK’s consumer credit market.

He added, “Thousands of baseless complaints submitted to lenders by the claim of the claim … They can now be removed from the system,” he added.

The controversy over car financing shot the lead yet Court of Appeal Court In October, compensation was granted to three people who claimed that they were misled by banks to hide the payment of commissions to the agents.

The three tests were brought by factory supervisor Marcus Johnson, a trained nurse in Hull, and the postman in Stoke On, on used cars that they bought from the agents with funding from the close brothers and Motunovo.

Reed explained that the Johnson case is partially different from the two parts due to the size of the committee, which amounted to 55 percent of the total interest costs. The committee was also 1,650 pounds, a quarter of the purchase price of 6,499 pounds.

“The fact that the undeclared committee was very high is a strong indication that the relationship was unfair.”

The court also found that in the Johnson case, the nature of the relationship between the agent and the lender was not properly revealed. While Johnson signed documents that mentioned the commission, the Supreme Court said that the examination was not prominent enough.

Kevin Durkin, a lawyer in the HD Law, represents Johnson, said that he is “pleased” that his client will be able to keep 3200 pounds from compensation he has already obtained from Motonovo and “the door opens to millions of other consumers to obtain compensation for an indifferent relationship.”

But Durkin said that the Supreme Court judges seem to have been affected by the rest of their ruling through warnings “Day of Resurrection” from the financial sector and the government on the painful economic impact if they stop the claims.

the scandal He threatened to cancel a market worth 40 billion pounds to finance cars purchased with loans in Britain every year, and to disrupt other fields such as insurance and provide consumer loans to buy white goods.

Lawyers said that the Supreme Court’s decision would contain the case. “The judgment removes a lot of uncertainty for automatic lending and financial products for indirect consumers,” said Kate Scott, a partner at the Kelford Chance Lawyer Corporation.

There was a clear rest in the treasury on the ruling. Chancellor Rachel Reeves feared chaos in the consumer credit market if the Supreme Court supported the previous ruling.

“The advisor was concerned about the drying of consumer credit and some companies in a big financial problem,” said one of the treasury employees.

Reeves had ordered the development of emergency plans in the event that the Supreme Court allowed the Court of Shock, including legislation retroactively to reduce the volume of claims.

The Treasury said: “We respect this ruling from the Supreme Court and we will now work with the organizers and industry to understand the impact of both companies and consumers.”

Even before the Court of Appeal last year, the lenders were already subjected to requests for estimated commissions, which pushed more to agents that put clients on loans with higher interest rates that have been banned since 2021. The last case threatened to expand banks’ responsibility for many fixed commissions as well.

The lenders have put money aside to cover the cost of the compensation process, which some analysts estimated before Friday’s ruling can lead to a compensation bill that approaches the payment insurance scandal of 50 billion pounds.

Lloyds Banking Group, the largest auto financing provider in the United Kingdom through its black horse arm, allocated more than 1.2 billion pounds, while Santander UK got a cost of 295 million pounds and seized the close brothers worth 165 million pounds.

The other lenders also achieved successes, including the R3BN fees ($ 166 million) in first and ruled by 173 million euros at the Bank of Ireland.

The shares in the Lloyds bank listed in the United States increased by more than 7 percent after the ruling.

Additional reports by George Parker in Edinburgh