The UK’s financial regulator has warned the Supreme Court that a recent ruling on car finance compensation “goes too far” and could unfairly broaden legal responsibilities for brokers, according to a report in the Evening Standard.
The case centres on whether millions of motorists could be owed refunds over hire-purchase deals arranged before 2021, following an earlier Court of Appeal decision that found lenders had unlawfully paid undisclosed commissions to car dealers.
Lenders FirstRand Bank and Close Brothers Group PLC (LSE:CBG) are now challenging that ruling, which involved three drivers who weren’t properly informed that their dealers—acting as credit brokers—were receiving commission payments.
The Financial Conduct Authority, intervening in the case, argued that it was wrong to assume all brokers had fiduciary duties to customers, warning that such an approach could have sweeping and unintended consequences for the industry. Around 99% of car finance deals since 2007 involved commission payments, the FCA noted.