LONDON (AP) – Millions of motorists in the UK may be entitled to substantial compensation if the country’s Supreme Court ruled Friday that certain employment purchase agreements were illegal.
The three judges will rule over the legitimacy of apparently hidden commission payments to auto dealers by 2021.
The results could have a significant impact on the financial services sector, which has suffered a series of scandals over the past decade, especially in connection with improper sales of loans. Payment Protection Insurance (PPI).
The Financial Services Agency, industry regulator, told the Supreme Court last year that nearly 99% of the financial agreements signed between about 32 million vehicles since 2007 involved payments to brokers.
If some dealers can ensure higher interest rates on loans, they will receive a larger commission. These so-called discretionary committee arrangements are banned by regulators in 2021, prompting subsequent challenges for three motorists.
Banks, including Lloyds, have reserved large sums in the case of liability.
Friday’s ruling comes after a court of appeals in October, and payments at the discretion are illegal.
The lower court found that all three motorists had purchased cars by 2021, or had not been informed or said at all, that the car dealer who acted as credit brokers would receive commissions from lenders to introduce them to their business and receive compensation for it.
Two lenders, Firstrand Bank and Close Brothers, handed the dispute to the Supreme Court and held a three-day hearing in April, a decision that was a “serious mistake.” The FCA also told the UK Supreme Court that the appeals court ruled that it was “too far away.”
If the Supreme Court is related to the claimant’s judge on the claimant’s side, it could mean that many people who take out their car loans by 2021 may be dealt with. If the court is on the lender’s side, the ruling could significantly limit the scope of potential spending to motorists.
This is not the first time that it has been accused of misleading in selling products.
Over the past decade or so, British banks have had to pay tens of thousands of pounds (USD) in compensation, while PPI is designed to pay individuals or small companies if they can’t make payments for their loans due to illness. The court ruled that many people often don’t know about insurance or do not require insurance.
