Car finance scandal: Millions of drivers risk having compensation claims rejected after Supreme Court verdict
Millions of drivers have been dealt a hammer blow by the Supreme Court after a hearing this afternoon determined that some drivers will not be able to claim compensation in the car finance scandal.Speaking this afternoon, Supreme Court President Lord Reed announced that the court would allow appeals brought by finance companies, rejecting two of the claims heard.The court upheld one claim from Mr Johnson who claimed that the "relationship between him and the finance company was unfair".Lord Reed said the driver would be awarded the amount of the commission plus the interest, while two other claims brought against lenders would be rejected.Do you have a story you'd like to share? Get in touch by emailing motoring@gbnews.ukAt the heart of the car finance scandal, dealers increased interest rates to earn higher commissions on car finance deals, which are known as discretionary commission arrangements (DCA).These mis-selling claims occur when finance providers fail to provide all the necessary information about a hire purchase (HP) agreement or a personal contract purchase (PCP).Lord Reed allowed Mr Johnson's claim that the fiduciary relationship with the dealer was unfair because the Court of Appeal made mistakes.However, the Supreme Court ruled that the Court of Appeal failed to take into account that dealers were motivated and financially incentivised to sell cars.READ MORE - Car finance scandal: Millions of drivers could receive compensation after landmark Supreme Court decision todayThe court also outlined why it was giving its verdict on a Friday afternoon. The Financial Conduct Authority (FCA) warned that an announcement during trading hours "may affect the price of securities issued by companies involved in the car finance market".The regulator warned that "market disorder" would be seen in the event that a decision was handed down at a time when the market could fall or rise, as announced by the President of the Supreme Court, Lord Reed of Allermuir.Despite this, shares in bank shares fell today, with Lloyds Bank, who are the most exposed to the car finance matter, fell 2.7 per cent, while Barclays dropped 3.6 per cent.LATEST DEVELOPMENTS:Drivers could lose billions in compensation from car finance scandal with verdict expectedRachel Reeves risks fury from millions of drivers with 'outrageous' car finance scandal decisionCar finance scandal could see 23 million British drivers awarded huge compensation paymentsSeveral of the largest car finance lenders have set aside more than £1billion to cover any potential claims that could stem from today's decision.This includes Lloyds, through its Black Horse subsidiary, which has £1.2billion set aside depending on a potential compensation scheme. Others include Santander UK (£295million), Close Brothers Motor Finance (£165million), Barclays (£90million) and Investec (£30million).A Treasury spokesman said: "We respect this judgment from the Supreme Court and we will now work with regulators and industry to understand the impact for both firms and consumers."We recognise the issues this court case has highlighted. That is why we are already taking forward significant changes to the Financial Ombudsman Service and the Consumer Credit Act. "These reforms will deliver a more consistent and predictable regulatory environment for businesses and consumers, while ensuring that products are sold to customers fairly and clearly."While this decision may impact many drivers, dealers could still face compensation calls for DCAs, although the payouts are likely to be much lower than the original £44billion figure.As highlighted by Martin Lewis on social media site X, the Court found that the relationship between Mr Johnson and the lender was unfair since it didn't outline that the products offered were from a selected panel.The money saving expert suggested that DCA cases are still likely to be upheld via the FCA and that other cases can be taken forward on a case-by-case basis if misleading documents were involved, or there was excessive commission.
hello@uk4mag.co.uk 
Millions of drivers have been dealt a hammer blow by the Supreme Court after a hearing this afternoon determined that some drivers will not be able to claim compensation in the car finance scandal.
Speaking this afternoon, Supreme Court President Lord Reed announced that the court would allow appeals brought by finance companies, rejecting two of the claims heard.
The court upheld one claim from Mr Johnson who claimed that the "relationship between him and the finance company was unfair".
Lord Reed said the driver would be awarded the amount of the commission plus the interest, while two other claims brought against lenders would be rejected.
Do you have a story you'd like to share? Get in touch by emailing motoring@gbnews.uk
At the heart of the car finance scandal, dealers increased interest rates to earn higher commissions on car finance deals, which are known as discretionary commission arrangements (DCA).
These mis-selling claims occur when finance providers fail to provide all the necessary information about a hire purchase (HP) agreement or a personal contract purchase (PCP).
Lord Reed allowed Mr Johnson's claim that the fiduciary relationship with the dealer was unfair because the Court of Appeal made mistakes.
However, the Supreme Court ruled that the Court of Appeal failed to take into account that dealers were motivated and financially incentivised to sell cars.
The court also outlined why it was giving its verdict on a Friday afternoon. The Financial Conduct Authority (FCA) warned that an announcement during trading hours "may affect the price of securities issued by companies involved in the car finance market".
The regulator warned that "market disorder" would be seen in the event that a decision was handed down at a time when the market could fall or rise, as announced by the President of the Supreme Court, Lord Reed of Allermuir.
Despite this, shares in bank shares fell today, with Lloyds Bank, who are the most exposed to the car finance matter, fell 2.7 per cent, while Barclays dropped 3.6 per cent.
LATEST DEVELOPMENTS:
- Drivers could lose billions in compensation from car finance scandal with verdict expected
- Rachel Reeves risks fury from millions of drivers with 'outrageous' car finance scandal decision
- Car finance scandal could see 23 million British drivers awarded huge compensation payments
Several of the largest car finance lenders have set aside more than £1billion to cover any potential claims that could stem from today's decision.
This includes Lloyds, through its Black Horse subsidiary, which has £1.2billion set aside depending on a potential compensation scheme. Others include Santander UK (£295million), Close Brothers Motor Finance (£165million), Barclays (£90million) and Investec (£30million).
A Treasury spokesman said: "We respect this judgment from the Supreme Court and we will now work with regulators and industry to understand the impact for both firms and consumers.
"We recognise the issues this court case has highlighted. That is why we are already taking forward significant changes to the Financial Ombudsman Service and the Consumer Credit Act.
"These reforms will deliver a more consistent and predictable regulatory environment for businesses and consumers, while ensuring that products are sold to customers fairly and clearly."
While this decision may impact many drivers, dealers could still face compensation calls for DCAs, although the payouts are likely to be much lower than the original £44billion figure.
As highlighted by Martin Lewis on social media site X, the Court found that the relationship between Mr Johnson and the lender was unfair since it didn't outline that the products offered were from a selected panel.
The money saving expert suggested that DCA cases are still likely to be upheld via the FCA and that other cases can be taken forward on a case-by-case basis if misleading documents were involved, or there was excessive commission.
/cloudfront-us-east-1.images.arcpublishing.com/gray/KFIET7ZYIFEURJHJSR4D5ZDPDQ.jpg){kind=small}
