Banks face anxious wait as UK Supreme Court considers 'secret' motor finance commissions
LONDON, April 1 (Reuters) - Major banks will be anxiously watching an appeal over motor finance commissions, which begins at the UK's Supreme Court on Tuesday as Britain's financial watchdog considers a scheme to pay out billions of pounds in compensation to consumers.
British lender Close Brothers (CBRO.L), opens new tab and South Africa's FirstRand (FSRJ.J), opens new tab are seeking to overturn a landmark Court of Appeal judgment, which said brokers must have customers' fully informed consent to receive a commission from lenders.
The Court of Appeal said lenders are liable to consumers when the commission is "secret" and can be liable where disclosure of the commission is insufficient to obtain informed consent.
That October ruling sent Close Brothers' shares plummeting due to the prospect of customers having to be repaid the amount of the commissions plus interest.
The judgment also hurt the UK arm of Banco Santander (SAN.MC), opens new tab, Lloyds (LLOY.L), opens new tab and Barclays (BARC.L), opens new tab and threw the car finance market in the UK – where more than 80% of new vehicles are bought on finance – into disarray.
The Supreme Court's decision could also affect Britain's wider consumer lending sector, with lawyers warning the implications of Court of Appeal's ruling could stretch to other goods and services purchased on credit arranged by a broker.
Close Brothers and FirstRand have set aside 165 and 140 million pounds respectively to cover potential claims – figures dwarfed by the 1.15 billion pounds ($1.49 billion) Lloyds has earmarked. Santander UK has set aside 290 million pounds and Barclays 95 million pounds.
Analysts suggest the Financial Conduct Authority's looming redress scheme could leave brokers paying out tens of billions of pounds in compensation to customers - possibly approaching the nearly 40 billion pounds lenders paid for misselling payment protection insurance between 1990 and 2010.
HIGH STAKES
If the Supreme Court dismisses the lenders' appeals, "it could send shockwaves spreading far beyond just the car finance industry", said Tom Webley, a partner at Reed Smith who is not involved in the case.
"There are a wide range of businesses that provide credit through commission-earning intermediaries and all of them could be affected by this judgment," Webley added.
The three-day appeal at the UK's highest court centres on whether car dealers owe duties as credit brokers to provide information to consumers and, if so, whether that makes any commission "secret" so as to make lenders liable to customers.
The Court of Appeal said in its ruling that brokers owe a fiduciary duty to consumers, which meant brokers should act in their customers' best interests and not receive a commission without obtaining their "fully informed consent".
The Supreme Court's ruling is expected in the summer, though its potential wider significance could push a decision later in the year.
The importance of the case is illustrated by the fact that the FCA has been given permission to address the court, though an unusual application by finance minister Rachel Reeves' Treasury for permission to intervene in the appeal was refused.
The FCA had already put its consideration of a redress scheme on hold pending the Court of Appeal's ruling, giving customers until December to lodge complaints about commissions.
The watchdog said last month that it would likely consult on an industry-wide scheme to compensate customers.
($1 = 0.7729 pounds)
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Powys County Times
35 minutes ago
- Powys County Times
Fact check: More people leave than arrive on current youth mobility schemes
On the BBC's Today programme on May 19, from around two hours and 21 minutes, Business and Trade Secretary Jonathan Reynolds said the UK's youth mobility arrangements with other countries reduce net migration. Asked 'how do you know there will be fewer people coming here than leaving?' Mr Reynolds said: 'Well, I've got 13 schemes in action already and that's the evidence of them.' He later added: 'I tell you the evidence of the current schemes just so you know is that they're a net negative on immigration.' Evaluation Around 24,400 youth mobility visas were issued to people wanting to come to the UK in 2024. Although figures are patchy for how many Britons go abroad, data from just three countries – Australia, New Zealand and Canada – suggests that 68,495 British citizens travelled to those countries in 2024 (the Australian data is for the 12 months to the end of June 2024). That would suggest that Mr Reynolds is right. However it does not take into account that Britons going abroad on these temporary visas will sooner or later come back, as will those who come to the UK. It is also not clear that this pattern will repeat in any similar deal with the EU. The UK population is much larger than those of Australia, New Zealand and Canada, so there are more Britons who can go to those countries than can come here. With the EU that is reversed. The facts How many people come to the UK on a youth mobility visa? Government data shows there were 24,437 people who were handed a youth mobility visa last year. Most of these were from one of the 13 countries with which the UK has a reciprocal arrangement. A small handful of visas – 131 in total – were for people from countries other than the 13. The Migration Observatory at the University of Oxford has suggested that these are the result of errors in data recording, or due to people having dual nationalities. The top three countries that sent people to the UK on youth mobility visas between January and December 2024 were Australia (9,754 visas), New Zealand (4,304 visas) and Canada (3,060 visas). How many Britons go abroad on youth mobility type schemes? Figures are patchy on how many British people have gone abroad on a youth mobility scheme. The Department for Business and Trade was unable to share data. Australia publishes a twice-yearly report into what it calls its working holiday visa programme. That is the Australian equivalent to the UK's youth mobility scheme. The latest such report covered the 12 months to the end of June 2024. That report showed that Australia issued 48,973 working holiday visas to UK citizens. Data from New Zealand is available on the website of the Ministry of Business, Innovation and Employment. Using its migration data explorer produces a spreadsheet which shows that there were 9,486 working holiday visas granted by New Zealand to UK citizens in between January and December 2024. Canadian data does not appear to be publicly available, but the figures were provided to the PA news agency by the Canadian Department for Immigration, Refugees and Citizenship. The data shows that in 2024 there were 9,972 work permits issued to UK and UK overseas territories citizens under the country's working holiday scheme, and a further 64 people had their permits extended. How do incoming youth mobility visas compare to outgoing? Net migration is a figure which subtracts the number of people coming into the country from the number of people leaving. The data cited above suggests that while 9,754 Australians came to the UK on youth mobility visas, 48,973 Britons went in the opposite direction. It must be noted that the time periods measured here are different, the Australian data is for the 12 months ending June 2024, while the UK data is for the 12 months ending December 2024. Meanwhile the data suggests that 4,304 New Zealanders came to the UK while 9,486 Britons went in the other direction. Data further shows that 3,060 Canadians came to the UK in 2024, while 9,972 Britons went in the other direction. This suggests that for each of these three countries the youth mobility schemes are – as Mr Reynolds suggested – reducing net migration. In fact Australia alone appears to receive twice as many Britons (48,973) as all people who the UK receives from all 13 countries added together (24,437). However, it should be noted that because youth mobility schemes are time-limited, Britons going abroad and people who have come to the UK on such visas will eventually be forced to return. This means the UK's inbound migration figures should take into account not just Australians and Canadians – for example – coming to the UK, but also Britons returning from Australia and Canada after their youth mobility visas expire. If it is assumed that everyone returns then over a longer time frame the youth mobility programmes will have a neutral impact on net immigration because every Briton who leaves the UK will come back and every non-Briton who comes to the UK will leave. This does not take into account the people – both Britons abroad and non-Britons in the UK – who apply for a different visa to stay in their adopted country. Do these conclusions also apply to the EU scheme? The impact on net migration of the potential EU scheme will depend on the details of the agreement between London and Brussels. Madeleine Sumption, director at the Migration Observatory, told the PA news agency that the size of the cap on the programme would be vital for the impact on net migration. She said the fact the UK sends more people to Australia, Canada and New Zealand than it receives from them 'probably results from the fact that the UK has a much larger population than they do, so we just have more young people potentially interested in moving'. With the EU scheme, Ms Sumption said, the population sizes are flipped – that is to say the EU's population is much bigger than the UK, leaving more young people who might be willing to come here. Therefore the smaller the cap on the number of visas is, the more likely both the EU and UK will fill their quotas. If both fill their quotas – and the quotas going both ways are the same – then the impact on net migration will be zero. However if the cap is large then it is more likely that there will not be as many Britons going to Europe as are coming in the opposite direction, which will bring up net migration. But, as with the existing schemes, both Britons in Europe and Europeans in the UK will eventually have to leave unless they find another visa, which over the long run should mean that the programme has a neutral impact on net migration. Links BBC – Today, 19/05/2025 Migration Observatory – What is the Youth Mobility Scheme and how does it work? (archived) – Entry clearance visas granted outside the UK (archived page and spreadsheet, using tab Data_Vis_D02) Australian Department of Home Affairs – Visitor visa statistics (archived) Australian Department of Home Affairs – Working Holiday Maker visa program report (archived) New Zealand Ministry of Business, Innovation and Employment – Migration data explorer (archived page and downloaded spreadsheet. To download the correct spreadsheet, instructions can be found at (archived): In dataset select 'W1 work decisions', in time period select 'calendar year' and in variables select 'application substream', 'application criteria' and 'decision type')
South Wales Guardian
an hour ago
- South Wales Guardian
Fact check: More people leave than arrive on current youth mobility schemes
Asked 'how do you know there will be fewer people coming here than leaving?' Mr Reynolds said: 'Well, I've got 13 schemes in action already and that's the evidence of them.' He later added: 'I tell you the evidence of the current schemes just so you know is that they're a net negative on immigration.' Around 24,400 youth mobility visas were issued to people wanting to come to the UK in 2024. Although figures are patchy for how many Britons go abroad, data from just three countries – Australia, New Zealand and Canada – suggests that 68,495 British citizens travelled to those countries in 2024 (the Australian data is for the 12 months to the end of June 2024). That would suggest that Mr Reynolds is right. However it does not take into account that Britons going abroad on these temporary visas will sooner or later come back, as will those who come to the UK. It is also not clear that this pattern will repeat in any similar deal with the EU. The UK population is much larger than those of Australia, New Zealand and Canada, so there are more Britons who can go to those countries than can come here. With the EU that is reversed. How many people come to the UK on a youth mobility visa? Government data shows there were 24,437 people who were handed a youth mobility visa last year. Most of these were from one of the 13 countries with which the UK has a reciprocal arrangement. A small handful of visas – 131 in total – were for people from countries other than the 13. The Migration Observatory at the University of Oxford has suggested that these are the result of errors in data recording, or due to people having dual nationalities. The top three countries that sent people to the UK on youth mobility visas between January and December 2024 were Australia (9,754 visas), New Zealand (4,304 visas) and Canada (3,060 visas). How many Britons go abroad on youth mobility type schemes? Figures are patchy on how many British people have gone abroad on a youth mobility scheme. The Department for Business and Trade was unable to share data. Australia publishes a twice-yearly report into what it calls its working holiday visa programme. That is the Australian equivalent to the UK's youth mobility scheme. The latest such report covered the 12 months to the end of June 2024. That report showed that Australia issued 48,973 working holiday visas to UK citizens. Data from New Zealand is available on the website of the Ministry of Business, Innovation and Employment. Using its migration data explorer produces a spreadsheet which shows that there were 9,486 working holiday visas granted by New Zealand to UK citizens in between January and December 2024. Canadian data does not appear to be publicly available, but the figures were provided to the PA news agency by the Canadian Department for Immigration, Refugees and Citizenship. The data shows that in 2024 there were 9,972 work permits issued to UK and UK overseas territories citizens under the country's working holiday scheme, and a further 64 people had their permits extended. How do incoming youth mobility visas compare to outgoing? Net migration is a figure which subtracts the number of people coming into the country from the number of people leaving. The data cited above suggests that while 9,754 Australians came to the UK on youth mobility visas, 48,973 Britons went in the opposite direction. It must be noted that the time periods measured here are different, the Australian data is for the 12 months ending June 2024, while the UK data is for the 12 months ending December 2024. Meanwhile the data suggests that 4,304 New Zealanders came to the UK while 9,486 Britons went in the other direction. Data further shows that 3,060 Canadians came to the UK in 2024, while 9,972 Britons went in the other direction. This suggests that for each of these three countries the youth mobility schemes are – as Mr Reynolds suggested – reducing net migration. In fact Australia alone appears to receive twice as many Britons (48,973) as all people who the UK receives from all 13 countries added together (24,437). However, it should be noted that because youth mobility schemes are time-limited, Britons going abroad and people who have come to the UK on such visas will eventually be forced to return. This means the UK's inbound migration figures should take into account not just Australians and Canadians – for example – coming to the UK, but also Britons returning from Australia and Canada after their youth mobility visas expire. If it is assumed that everyone returns then over a longer time frame the youth mobility programmes will have a neutral impact on net immigration because every Briton who leaves the UK will come back and every non-Briton who comes to the UK will leave. This does not take into account the people – both Britons abroad and non-Britons in the UK – who apply for a different visa to stay in their adopted country. Do these conclusions also apply to the EU scheme? The impact on net migration of the potential EU scheme will depend on the details of the agreement between London and Brussels. Madeleine Sumption, director at the Migration Observatory, told the PA news agency that the size of the cap on the programme would be vital for the impact on net migration. She said the fact the UK sends more people to Australia, Canada and New Zealand than it receives from them 'probably results from the fact that the UK has a much larger population than they do, so we just have more young people potentially interested in moving'. With the EU scheme, Ms Sumption said, the population sizes are flipped – that is to say the EU's population is much bigger than the UK, leaving more young people who might be willing to come here. Therefore the smaller the cap on the number of visas is, the more likely both the EU and UK will fill their quotas. If both fill their quotas – and the quotas going both ways are the same – then the impact on net migration will be zero. However if the cap is large then it is more likely that there will not be as many Britons going to Europe as are coming in the opposite direction, which will bring up net migration. But, as with the existing schemes, both Britons in Europe and Europeans in the UK will eventually have to leave unless they find another visa, which over the long run should mean that the programme has a neutral impact on net migration. BBC – Today, 19/05/2025 Migration Observatory – What is the Youth Mobility Scheme and how does it work? (archived) – Entry clearance visas granted outside the UK (archived page and spreadsheet, using tab Data_Vis_D02) Australian Department of Home Affairs – Visitor visa statistics (archived) Australian Department of Home Affairs – Working Holiday Maker visa program report (archived) New Zealand Ministry of Business, Innovation and Employment – Migration data explorer (archived page and downloaded spreadsheet. To download the correct spreadsheet, instructions can be found at (archived): In dataset select 'W1 work decisions', in time period select 'calendar year' and in variables select 'application substream', 'application criteria' and 'decision type') Canadian data provided to PA news agency (archived) Madeleine Sumption profile (archived)
Leader Live
an hour ago
- Leader Live
Fact check: More people leave than arrive on current youth mobility schemes
Asked 'how do you know there will be fewer people coming here than leaving?' Mr Reynolds said: 'Well, I've got 13 schemes in action already and that's the evidence of them.' He later added: 'I tell you the evidence of the current schemes just so you know is that they're a net negative on immigration.' Around 24,400 youth mobility visas were issued to people wanting to come to the UK in 2024. Although figures are patchy for how many Britons go abroad, data from just three countries – Australia, New Zealand and Canada – suggests that 68,495 British citizens travelled to those countries in 2024 (the Australian data is for the 12 months to the end of June 2024). That would suggest that Mr Reynolds is right. However it does not take into account that Britons going abroad on these temporary visas will sooner or later come back, as will those who come to the UK. It is also not clear that this pattern will repeat in any similar deal with the EU. The UK population is much larger than those of Australia, New Zealand and Canada, so there are more Britons who can go to those countries than can come here. With the EU that is reversed. How many people come to the UK on a youth mobility visa? Government data shows there were 24,437 people who were handed a youth mobility visa last year. Most of these were from one of the 13 countries with which the UK has a reciprocal arrangement. A small handful of visas – 131 in total – were for people from countries other than the 13. The Migration Observatory at the University of Oxford has suggested that these are the result of errors in data recording, or due to people having dual nationalities. The top three countries that sent people to the UK on youth mobility visas between January and December 2024 were Australia (9,754 visas), New Zealand (4,304 visas) and Canada (3,060 visas). How many Britons go abroad on youth mobility type schemes? Figures are patchy on how many British people have gone abroad on a youth mobility scheme. The Department for Business and Trade was unable to share data. Australia publishes a twice-yearly report into what it calls its working holiday visa programme. That is the Australian equivalent to the UK's youth mobility scheme. The latest such report covered the 12 months to the end of June 2024. That report showed that Australia issued 48,973 working holiday visas to UK citizens. Data from New Zealand is available on the website of the Ministry of Business, Innovation and Employment. Using its migration data explorer produces a spreadsheet which shows that there were 9,486 working holiday visas granted by New Zealand to UK citizens in between January and December 2024. Canadian data does not appear to be publicly available, but the figures were provided to the PA news agency by the Canadian Department for Immigration, Refugees and Citizenship. The data shows that in 2024 there were 9,972 work permits issued to UK and UK overseas territories citizens under the country's working holiday scheme, and a further 64 people had their permits extended. How do incoming youth mobility visas compare to outgoing? Net migration is a figure which subtracts the number of people coming into the country from the number of people leaving. The data cited above suggests that while 9,754 Australians came to the UK on youth mobility visas, 48,973 Britons went in the opposite direction. It must be noted that the time periods measured here are different, the Australian data is for the 12 months ending June 2024, while the UK data is for the 12 months ending December 2024. Meanwhile the data suggests that 4,304 New Zealanders came to the UK while 9,486 Britons went in the other direction. Data further shows that 3,060 Canadians came to the UK in 2024, while 9,972 Britons went in the other direction. This suggests that for each of these three countries the youth mobility schemes are – as Mr Reynolds suggested – reducing net migration. In fact Australia alone appears to receive twice as many Britons (48,973) as all people who the UK receives from all 13 countries added together (24,437). However, it should be noted that because youth mobility schemes are time-limited, Britons going abroad and people who have come to the UK on such visas will eventually be forced to return. This means the UK's inbound migration figures should take into account not just Australians and Canadians – for example – coming to the UK, but also Britons returning from Australia and Canada after their youth mobility visas expire. If it is assumed that everyone returns then over a longer time frame the youth mobility programmes will have a neutral impact on net immigration because every Briton who leaves the UK will come back and every non-Briton who comes to the UK will leave. This does not take into account the people – both Britons abroad and non-Britons in the UK – who apply for a different visa to stay in their adopted country. Do these conclusions also apply to the EU scheme? The impact on net migration of the potential EU scheme will depend on the details of the agreement between London and Brussels. Madeleine Sumption, director at the Migration Observatory, told the PA news agency that the size of the cap on the programme would be vital for the impact on net migration. She said the fact the UK sends more people to Australia, Canada and New Zealand than it receives from them 'probably results from the fact that the UK has a much larger population than they do, so we just have more young people potentially interested in moving'. With the EU scheme, Ms Sumption said, the population sizes are flipped – that is to say the EU's population is much bigger than the UK, leaving more young people who might be willing to come here. Therefore the smaller the cap on the number of visas is, the more likely both the EU and UK will fill their quotas. If both fill their quotas – and the quotas going both ways are the same – then the impact on net migration will be zero. However if the cap is large then it is more likely that there will not be as many Britons going to Europe as are coming in the opposite direction, which will bring up net migration. But, as with the existing schemes, both Britons in Europe and Europeans in the UK will eventually have to leave unless they find another visa, which over the long run should mean that the programme has a neutral impact on net migration. BBC – Today, 19/05/2025 Migration Observatory – What is the Youth Mobility Scheme and how does it work? (archived) – Entry clearance visas granted outside the UK (archived page and spreadsheet, using tab Data_Vis_D02) Australian Department of Home Affairs – Visitor visa statistics (archived) Australian Department of Home Affairs – Working Holiday Maker visa program report (archived) New Zealand Ministry of Business, Innovation and Employment – Migration data explorer (archived page and downloaded spreadsheet. To download the correct spreadsheet, instructions can be found at (archived): In dataset select 'W1 work decisions', in time period select 'calendar year' and in variables select 'application substream', 'application criteria' and 'decision type') Canadian data provided to PA news agency (archived) Madeleine Sumption profile (archived)
