7:00 am, August 1, 2025
The motor finance industry is waiting with bated breath today as it waits to hear the result of Close Brothers’ Supreme Court appeal.
The lender is one of two finance providers to challenge the Court of Appeal’s landmark ruling last October, which found in favour of consumers, who claimed they had been mis-sold car finance.
The judgement, which also went against FirstRand Bank, found that dealers should have told customers about any commission received from lenders as part of finance deals, sparking chaos in the finance market.
The pair appealed the decision to the UK’s highest court and a final decision is now set to be published in just a few hours’ time.
Multiple news outlets have reported that the judgement will be published this afternoon (Aug 1), ahead of the court breaking for its summer recess.
Any finding against lenders could spark carnage among finance providers, with the government said to be concerned about the potential impact on the wider economy.
Car Dealer reported earlier this week that Chancellor Rachel Reeves is considering superseding the court, if it sides with consumers, by changing the law retrospectively to give parliament the final word over the handling and disclosure of commission arrangements to borrowers.
It is hoped that the move would keep any redress scheme manageable for lenders and ensure that the scandal does not move beyond the automotive world.
The Treasury previously attempted to step in and make submissions to the hearing but the request from chancellor Rachel Reeves was ultimately denied by the court.
In a letter to the Supreme Court in December last year, the Financial Conduct Authority said that almost 99% of the roughly 32 million car finance agreements entered into since 2007 involved a commission payment to a broker.
The current appeal centres around three motorists who all bought their cars before 2021.
The Court of Appeal ruled that the trio had not been told either clearly enough or at all that the car dealers, acting as credit brokers, would receive a commission from the lenders for introducing business to them, and should receive compensation.
The lenders challenged the ruling at the Supreme Court, with lawyers for FirstRand telling justices that the decision was an ‘egregious error’.
The three drivers – Marcus Johnson, Andrew Wrench and Amy Hopcraft – all opposed the challenge.
If justices dismiss the challenge, it is unclear how many people could be entitled to compensation.
If they side with the lenders, then it is likely to significantly limit the scope of potential payouts to motorists.
The Financial Conduct Authority has said it will confirm within six weeks of the judgment whether it is planning to launch a redress scheme.
