UK high court considers 'secret' motor finance commissions

LONDON: Major banks will be anxiously watching an appeal over motor finance commissions, which was to begin at the UK's Supreme Court yesterday, as Britain's financial watchdog considers a scheme to pay out billions of pounds in compensation to consumers.

- SAM TOBIN

British lender Close Brothers and Shawbrook are seeking to overturn a landmark Court of Appeal judgment, which said brokers must have customers' fully informed consent to receive a commission from lenders.

The Court of Appeal said lenders are liable to customers where the commission is "secret" and can be liable where disclosure of the commission is insufficient to obtain informed consent.

That October ruling sent Close Brothers' shares plummeting due to the prospect of customers having to be repaid the amount of the commissions plus interest.

The judgment also hurt the UK arm of Banco Santander, Lloyds and Barclays and threw the car finance market in the UK — where more than 80% of new vehicles are bought on finance — into disarray.