The supreme court has granted permission for two car lenders to appeal against a landmark ruling on motor finance commission payments that has left firms fearing a potential £30bn compensation bill.
The decision gives Close Brothers and the MotoNovo owner FirstRand a chance to overturn a shock ruling by the court of appeal in October which said that paying “secret” commission to car dealers – without disclosing the sum and terms of that commission to borrowers – was unlawful.
The court of appeal decision went beyond existing City regulations and investigations by the Financial Conduct Authority (FCA) and opened the door to a fresh flood of claims that the rating agency Moody’s says could now cost lenders up to £30bn.
News that the supreme court had accepted the case bolstered motor lenders’ shares. Close Brothers jumped as much as 8% while Lloyds Banking Group, which owns the Black Horse car loans business, rose 4%, and Barclays gained 1.6%.
The supreme court has not yet set a date for the hearing, but said it would take place by the end of the next legal term, 16 April…
