UK Supreme Court overturns ruling on motor finance commissions in win for banks
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UK Supreme Court overturns ruling on motor finance commissions in win for banks
UK Supreme Court overturns landmark ruling on car finance commissions. Decision likely to ease fears of banks about the extent of a redress scheme. US-listed shares of UK banks rose after the court decision was announced after the close of share trading in London. One claimant was awarded just over 1,650 pounds ($2,187.74) on the grounds that his relationship with the lender was unfair, the court said in its ruling on the case.
LONDON, Aug 1 (Reuters) – The United Kingdom’s Supreme Court on Friday overturned a landmark ruling on car finance commissions in a decision that is likely to ease the fears of banks about the extent of a redress scheme.
Supreme Court president Robert Reed said the car dealers who sold the vehicles and arranged the finance did not owe fiduciary duties to customers, reversing a surprise Court of Appeal ruling that sent shockwaves through the motor finance industry.
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US-listed shares of UK banks rose after the court decision which was announced after the close of share trading in London.
Reed said the Court of Appeal had “failed to understand that the dealer has a commercial interest in the arrangement between a customer and a finance company.”
While the Supreme Court overturned the Court of Appeal’s findings that the commissions in three linked cases amounted to a bribe, one claimant was awarded just over 1,650 pounds ($2,187.74) on the grounds that his relationship with the lender was unfair.
Reed, however, said that non-disclosure or a partial disclosure by dealers of the existence of a commission did not necessarily make the relationship between a customer and a lender unfair.
Reed said the Supreme Court had unusually given its judgment on a Friday afternoon after markets closed on the advice of Britain’s Financial Conduct Authority “in order to avoid causing unnecessary disruption” for investors.
Banks could still face claims for compensation for motor finance commissions, but the extent of the total bill facing lenders is likely to now be significantly reduced.
The Financial Conduct Authority, a regulator, has previously said it will outline a possible redress scheme for consumers within six weeks of the final judgment.
($1 = 0.7542 pounds)
Reporting by Sam Tobin Editing by William Schomberg
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