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Car finance lending trio may have to pay out nearly £1bn after class action claiming overcharging is launched

  • Landmark action is brought against three leading car finance lenders
  • It’s claimed inflated interest rates were charged on deals over six years
  • In return, car dealers and credit brokers are said to have got more commission
  • Dealers were being incentivised without customers knowing about it, it is said
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Time 12:02 pm, August 7, 2023

Three top car finance lenders could be forced to pay out almost £1bn over claims drivers were overcharged for their used car loans.

A landmark class action has been launched against Lloyds Banking Group-owned Black Horse, Santander and MotoNovo Finance, which are accused of slapping excessive interest on a million arrangements to the tune of nearly £1bn.

It’s alleged there was an anti-competitive network agreement between car dealers and finance providers that resulted in customers being charged higher interest rates without knowing about it.


The deals, which allegedly saw car retailers and credit brokers get higher commission from the lenders after selling the finance at inflated interest rates, were struck between 2015 and 2021, according to the Daily Telegraph, which is owned by Lloyds Banking Group.

This particular type of discretionary commission was banned by the Financial Conduct Authority in 2021.

The Lloyds-owned Black Horse division, Santander UK and MotoNovo are together said to control nearly three-fifths – 57 per cent – of the UK’s car finance sector.


Black Horse faces claims of some £624m, MotoNovo Finance £209m and Santander UK £166m.

The High Court campaign is being led by Enfield Labour councillor Doug Taylor, who was quoted by the Daily Telegraph as saying: ‘Affected consumers unknowingly paid more for their car loans because of the way these companies incentivised dealers.

‘With this legal action, I am standing up for people across the UK who have been affected by the actions of these companies, seeking justice and compensation for the financial losses they have suffered.’

He claimed the trio of companies ‘took advantage of their customers’.

Scott+Scott law firm partner Belinda Hollway was quoted as saying the group action was a chance to ‘hold large companies to account on behalf of consumers’.

International litigation finance firm Woodsford is footing the legal bill.

The competition appeal tribunal at the High Court will ultimately decide if the action can go ahead.

Santander UK declined to comment, and MotoNovo Finance was quoted as saying: ‘We’re aware of a legal claim that has been brought against us and we are preparing our response.

‘We won’t be commenting while these legal proceedings are active.’

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Meanwhile, a spokesman for Black Horse was quoted as saying: ‘We are committed to ensuring customers have clear and transparent information so they can make informed decisions about the products they choose.

‘Following the FCA’s motor finance market review, new rules were set out for the industry in 2021, which we have implemented.

‘We continue to comply with regulatory requirements that apply in relation to the payment of commission and the disclosure of commission to customers.’

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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