UK Supreme Court Ruling Paves Way for Consumer Compensation in Car Finance Cases
The UK Supreme Court rendered a significant decision on Friday that primarily favored banks in a case concerning the alleged misselling of car finance, whereby banks paid substantial commissions to motor brokers. However, the court upheld the appeal of one consumer, taking into account the magnitude of the commission paid by the bank to the motor dealer and the manner in which it was disclosed, reports 24brussels.
The Financial Conduct Authority (FCA) stated that, “Where consumers have lost out, they should be appropriately compensated in an orderly, consistent and efficient way.”
The FCA plans to conduct a thorough consultation in October, outlining the potential framework of a compensation scheme. This initiative is intended to address both discretionary and non-discretionary commission arrangements, with the compensation method guided by the assessed degree of consumer harm.
Further considerations will include the interest to be paid on compensation awards, the possibility of extending payments as far back as 2007, and whether customers should be required to opt-in or opt-out of the scheme.
If implemented, the FCA indicated that the initial payments from the compensation scheme could begin in 2026.
