Millions to miss out on car loan compensation

LENDERS have avoided potentially having to pay compensation to millions of drivers after the Supreme Court ruled they are not liable for hidden commission payments in car finance schemes.

- CALLUM PARKE

Two lenders, FirstRand Bank and Close Brothers, went to the UK's highest court to challenge a Court of Appeal ruling which found "secret" commission payments paid by buyers to car dealers as part of finance arrangements made before 2021 without the motorist's fully informed consent were unlawful.

The ruling in October found three motorists, who all bought their cars before 2021, should receive compensation after they were not told either clearly enough or at all that the car dealers, acting as credit brokers, would receive a commission from the lenders for introducing business to them.

Lawyers for the lenders told the Supreme Court at a three-day hearing in April the decision was an "egregious error" while the Financial Conduct Authority intervened in the case and claimed the ruling "goes too far".

The three drivers, Marcus Johnson, Andrew Wrench and Amy Hopcraft, opposed the challenge.