The outcome, expected sometime in July, has the potential to reshape not just motor finance but all types of lending agreements where third parties are involved.
We already know that the FCA will initiate a proactive redress programme, the parameters for this are yet to be defined and their industry consultation will only be available within 6 weeks of the supreme court judgement.
The key grounds for the Supreme Court appeal
The key arguments, as per the Supreme Court website, were:
- When acting as credit brokers, do car dealers owe consumers a “disinterested” and/or fiduciary duty to provide information, advice or recommendation?
- If so, were the payments of commissions by the lenders to the car dealers secret such that the lenders become primary wrongdoers?
- Can the lenders be liable in the tort of bribery? If so, what is the correct approach to remedies?
- If there was sufficient disclosure of the commission to negate secrecy, was there insufficient disclosure to procure the consumers’ fully informed consent to the payment such that the lenders are liable as accessories for procuring the credit brokers’ breach of duty?
- Can insufficient disclosure also suffice to make the relationship between lender and consumer “unfair” for the purposes of the Consumer Credit Act 1974?
In addition, the FCA also presented its submission, highlighting their concerns around some of the current commissions structures within in the finance sector. You can read their full written submission to the Court here.
What to expect next from the Court and FCA?
The Court is likely to give its judgement in July.
The FCA is waiting for this before delivering the results of their review into discretionary and other commission arrangements.
For motor firms, it’s time to prepare for the expected redress schemes. Identifying potentially affected customers, getting data, processes, and systems in place to manage the current influx as well as future redress.
EQ can make this easier.
EQ helps lenders go from theory to action - when you need to act quickly, we have the flexibility and capacity to get a project up and running within weeks.
With over 20 years’ experience in tackling complex remediation challenges, we can provide a true end to end solution, ensuring all customer engagement is covered.
Trusted by major financial services brands, we bring the expertise to:
- Identify affected customers
- Build compliant, customer-focused solutions
- Deliver accurate redress at scale
Whatever your stage of planning and readiness for your response, we can help - efficiently and transparently.
EQ Customer Resolutions is already working with many motor finance firms on their proactive approaches to handling commission complaints. This includes support for managing DSARs and mass claims, data analysis work, and preparations for remediation and redress projects. Get in touch to find out how we can support your business.