UK top court to rule on multi-billion pound car loan scandal / Photo: Tolga Akmen - AFP
-
China and Gabon Elevate Ties to 'Shared Future' Amid State Visit
-
Portuguese Finance Minister to Review Socialist Budget Amendments
-
World Golf Awards 2026 to be Hosted at Egypt’s Madinaty Golf Club
-
Early Polar Vortex Disruption Creates Uncertain Winter Outlook for Pennsylvania
-
12 Billion Gallons of Raw Sewage Discharged into Chicago River Despite Deep Tunnel Infrastructure
-
Stadler Begins Testing First Hydrogen Narrow-Gauge Trains for Southern Italy
-
Edmund Richardson Wins Baillie Gifford Prize for 'Alexander' Biography
-
Kospi Falls Below 5,000 as U.S. AI Regulation Fears Trigger Circuit Breaker
-
BYD Drops Rotating Screens in New Models Due to Tech Limits
UK top court to rule on multi-billion pound car loan scandal
Britain's highest court will Friday determine whether controversial car loans were unlawful, which could pave the way for millions of motorists to claim billions of pounds in compensation from banks.
The loans, made available for 14 years from 2007, incentivised car dealers to offer higher interest rates in return for a bigger commission from banks.
The Supreme Court will determine whether to uphold a judgment by the Court of Appeal last year that ruled it was unlawful for car dealers to receive a commission on loans without sufficiently informing borrowers.
It is estimated that millions of drivers would be eligible for compensation should the Supreme Court side with borrowers, following its three-day hearing in April.
One case involves Marcus Johnson -- who in 2017 bought a Suzuki Swift from a car dealer in Cardiff for £6,500 ($8,560 today) including loan costs -- unaware that interest paid on the loan amount would fund commission of more than £1,600.
When the Court of Appeal ruled in favour of Johnson, ordering South African lender FirstRand Bank to refund the commission plus interest, it sparked panic across the finance sector.
British banks have set aside considerable sums in preparation for the ruling, including Lloyds, which has earmarked nearly £1.2 billion.
The total estimated cost for banks varies, but HSBC bank analysts suggested before the trial that it could come to £44 billion.
Since then, analysts have revised down the potential exposure of banks, British media reports suggesting a figure of around £11 billion.
In the three cases being judged by the Supreme Court, consumers are also facing off against British bank Close Brothers.
The Financial Conduct Authority, which banned undisclosed commissions in 2021, could mandate a collective automatic compensation programme should the court sides with borrowers.
Analysts said that Britain's Labour government may be concerned about the impact on banks' willingness to provide credit amid economic uncertainty caused by US tariffs and geopolitical unrest.
Finance minister Rachel Reeves is reportedly considering changes to the law to limit the banks' exposure.
E.Borba--PC
