Car finance compensation landmark ruling due
Summary
The UK's Supreme Court is set to make a decision that could allow many people to claim compensation for mis-sold car finance deals. The issue involves hidden commission payments to car dealers, which were previously ruled unlawful. This decision could significantly impact lenders and customers within the car finance sector.Key Facts
- The Supreme Court will decide on the legality of hidden commissions given to car dealers.
- If the ruling supports compensation, millions who bought cars on finance may be eligible for claims.
- Around 90% of new cars in the UK are purchased through finance agreements.
- Major lenders have set aside large funds in anticipation of potential payouts.
- UK car finance is a major lending area, second only to mortgages.
- Discretionary commission arrangements (DCAs), offering higher commissions for higher interest rates, were banned in 2021.
- The Financial Conduct Authority may establish a central compensation scheme for affected buyers.
- The Supreme Court is reviewing three test cases that challenge these commission arrangements.
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