Car sales: FCA considers intervening in finance mis-selling appeal
The Supreme Court has granted permission to appeal the Court of Appeal decision on motor finance commissions, acceding to calls for a quick decision.
Close Brothers, one of the defendants in the three conjoined cases, said it lodged its application on 22 November, and received notification of permission on Wednesday. FirstRand Bank is the defendant in the other two.
The appeals will be listed for a date to be confirmed in Hilary Term, which runs from 13 January to 16 April 2025.
The Court of Appeal ruling, known as Johnson, found it unlawful for car dealers, acting as brokers, to receive a commission from the lender providing motor finance without obtaining the customer’s informed consent; it applied to both discretionary and non-discretionary commissions. The industry reacted with alarm.
In a statement, the Financial Conduct Authority welcomed “the swiftness” of the decision, which it had requested, and said it hoped the substantive appeal would be determined as soon as possible.
“This is because of the potential impact of any judgment on the motor finance market and the many consumers who rely on it. We are considering whether to formally intervene in the case to share our expertise to assist the Court on the substantive appeal.
“We have proposed extending the time firms have to respond to motor finance complaints where a non-discretionary commission arrangement was involved. We will take the court’s decision to hear the appeal into account as we decide on the outcome of our consultation.”
The regulator – which hitherto had been focused only on discretionary commission arrangements – said it would publish it policy statement by 19 December.
FCA chief executive Nikhil Rathi told Martin Lewis’s Money Live show on ITV on Wednesday that it had become more likely that it would set up a redress scheme.
According to S&P Global, analyst estimates of the size of the compensation that could result from the Supreme Court rejecting the appeal ranges from £6bn to £44bn.
Charlie Nunn, chief executive of Lloyds Bank – which is significantly exposed to motor finance claims through its Black Horse Finance subsidiary – was reported as telling last week’s FT Global Banking Summit that “this principle of the courts coming up with decisions independently from the regulation, which is then having a significant retrospective lookback, is already bleeding across the whole economy”.
