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2025-08-02 07:46:46
[A Brake on the Brink: UK Car Loan Crisis Takes a Plot Twist, Leaving Banking Giants in Shock] ⑴ The UK Supreme Court overturned a landmark ruling on car finance commissions, bringing relief to the banking industry, which had previously been nervous about huge payouts. ⑵ This ruling reverses a 2024 ruling that had shaken the industry and pressured the share prices of the banks involved. ⑶ Analysts had warned that this could become another costly scandal facing the UK banking industry after the Payment Protection Insurance scandal, with total payouts potentially reaching tens of billions of pounds. ⑷ The Supreme Court ruled that car dealers do not owe a fiduciary duty to their customers, and therefore lenders are not liable for commissions. ⑸ Despite this, lenders may still face compensation claims in some cases of overcharging, but the overall size of the payouts is expected to be significantly reduced. ⑹ The Financial Conduct Authority said it will confirm whether to consult on a compensation plan before the market opens next Monday. ⑺ The ruling also eased concerns from the UK Treasury, which had previously worried that not overturning the original ruling would make it more difficult for consumers to obtain car loans and could damage investment in the UK financial services industry. ⑻ Although the Supreme Court overturned the ruling that "commissions constituted bribes," one plaintiff was awarded £1,650 in compensation for an "unfair" relationship with the lender. ⑼ The head of KPMG's UK banking division stated that despite the verdict, affected lenders still need to prepare for large-scale customer compensation that could arrive early next year.
