Millions of motorists miss out on payouts for car finance loans

MILLIONS of motorists suffered a blow yesterday when a court spared British banks and lenders from paying a multi-billion-pound compensatory bill for mis-sold car finance.

- By Steph Spyro

The UK’s Supreme Court overturned earlier rulings that car dealers should have informed customers about commissions paid by the banks when they arranged the loans.

The decision shields creditors including Lloyds, Barclays and Santander from a wave of claims that could have cost them £44billion, according to analysis.

But there is still a glimmer of hope for consumers after the Financial Conduct Authority said last night it would decide this weekend on whether to launch a redress scheme.

It was lenders FirstRand Bank and Close Brothers who went to the Supreme Court to challenge a Court of Appeal ruling that payments made before 2021 without buyers’ fully informed consent were unlawful.

A test case of three motorists - Marcus Johnson, Andrew Wrench and Amy Hopcraft - had been ruled upon by the lower court last October. Judges said the trio should be recompensed as they were not told clearly enough - or at all - that the dealers, acting as credit brokers, would receive a commission from the lenders for introducing business to them.

Then in April lawyers for the two lenders told the Supreme Court’s hearing that the decision was an “egregious error”.