UK top court to rule on multi-billion pound car loan scandal
The Supreme Court will determine whether to uphold a judgment by the Court of Appeal last year that ruled it was unlawful for car dealers to receive a commission on loans without sufficiently informing borrowers.
It is estimated that millions of drivers would be eligible for compensation should the Supreme Court side with borrowers, following its three-day hearing in April.
One case involves Marcus Johnson -- who in 2017 bought a Suzuki Swift from a car dealer in Cardiff for £6,500 ($8,560 today) including loan costs -- unaware that interest paid on the loan amount would fund commission of more than £1,600.
When the Court of Appeal ruled in favour of Johnson, ordering South African lender FirstRand Bank to refund the commission plus interest, it sparked panic across the finance sector.
British banks have set aside considerable sums in preparation for the ruling, including Lloyds, which has earmarked nearly £1.2 billion.
The total estimated cost for banks varies, but HSBC bank analysts suggested before the trial that it could come to £44 billion.
Since then, analysts have revised down the potential exposure of banks, British media reports suggesting a figure of around £11 billion.
In the three cases being judged by the Supreme Court, consumers are also facing off against British bank Close Brothers.
The Financial Conduct Authority, which banned undisclosed commissions in 2021, could mandate a collective automatic compensation programme should the court sides with borrowers.
Analysts said that Britain's Labour government may be concerned about the impact on banks' willingness to provide credit amid economic uncertainty caused by US tariffs and geopolitical unrest.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
France 24
an hour ago
- France 24
Bank of England set to cut rate as UK economy weakens
With the BoE likely to trim borrowing costs by a quarter point to 4.0 percent, focus will be on potential changes to the central bank's economic growth and inflation outlooks. "There are clear signs of (UK) economic deterioration, particularly stemming from the labour market," Victoria Scholar, head of investment at Interactive Investor, noted ahead of the latest rate call. "Yet policymakers must weigh this up against the risk of inflationary pressures particularly with rising food prices and international uncertainty around (US President Donald) Trump's tariffs and volatility in energy markets." Against this backdrop, analysts expect splits within the Bank's Monetary Policy Committee. Some argue that while the majority of the nine policymakers, including governor Andrew Bailey, will vote for a quarter-point cut, some are likely to demand an even larger reduction and others no change. A quarter-point cut Thursday would be the BoE's fifth such reduction since starting a trimming cycle in August 2024, emphasising its "gradual" approach to reducing rates. The BoE's main task is to keep Britain's annual inflation rate at 2.0 percent but the latest official data showed it had jumped unexpectedly to an 18-month high in June. The Consumer Prices Index increased to 3.6 percent as motor fuel and food prices stayed high. Weak economy Latest official figures also show that Britain's economy unexpectedly contracted for a second month running in May and UK unemployment is at a near four-year high of 4.7 percent. This is largely down to Prime Minister Keir Starmer's Labour government increasing a UK business tax from April, the same month that the country became subject to Trump's 10-percent baseline tariff on most goods. London and Washington reached an agreement in May to cut levies of more than 10 percent imposed by Trump on certain UK-made items imported by the United States, notably vehicles. Last month, the BoE warned in a report that tariff unpredictability and Middle East conflicts pose risks to UK financial stability. The US Federal Reserve last week kept interest rates unchanged, defying strong political pressure from Trump to slash borrowing costs in a bid to boost the world's biggest economy. Asked about US tariffs following the decision, Fed Chair Jerome Powell told a press conference: "We're still a ways away from seeing where things settle down." The European Central Bank is meanwhile widely expected to keep rates unchanged at its next meeting, with eurozone inflation around the ECB's two-percent target. But that could change, according to some economists, based on how Trump's tariffs affect the single-currency bloc.
France 24
18 hours ago
- France 24
UK watchdog bans Zara ads over 'unhealthily thin' model photos
The Advertising Standards Authority (ASA) said it took action after it received a complaint about the ads, which were listed on Zara's website in May. One image showed a model with "protruding" collarbones, with her pose and styling making her appear "very slim". Another featured a model who looked "slightly gaunt" owing to a slicked-back hairstyle and that the lighting and clothing made her appear "noticeably thin", the ASA said. The watchdog ruled the ads breached social responsibility rules and must not appear again in the same form. Zara told the ASA that the models were medically certified as healthy, in line with British guidelines. It also assured that only minor lighting and colouring edits were made on the images. The ads were removed after the ASA made the company aware of the complaint, Zara said in a statement. It added that Zara "follow stringent guidelines and controls in the selection and photographing of models". © 2025 AFP
Euronews
a day ago
- Euronews
Trump warns EU: 35% tariffs if $600bn investment pledge unfulfilled
A controversial investment pledge forming part of the EU-US trade deal will need to be honoured by the EU or 35% blanket tariffs will be applied to the bloc, US President Donald Trump has warned. On Tuesday President Trump was quizzed on the deal he agreed by handshake with Commission President Ursula von der Leyen in Scotland on 27 July on CNBC's 'Squawk Box' via phone. He touted the US position - which a White House fact sheet stated - that the agreement included a pledge for the EU to invest $600 billion in the US by the end of his second term. "This new investment is in addition to the over $100 billion (that) EU companies already invest in the United States every year," the fact sheet stated following the deal. The European Commission is unable to design and implement investments on behalf of the private sector. The $600 billion has been described by the Commission as an indication based on the executive's contacts with industry. "It's not something the EU, as a public authority, can guarantee – it's something based on the intention of private companies," a senior official said last week. Asked on Squawk Box what teeth there were in the investment pledge element of the deal, Trump said, if it didn't happen, 'then they pay tariffs of 35%'. Trump said that the investment pledge was one of the reasons he had dropped tariffs to a blanket 15% rate, so if it is unfulfilled then higher tariffs will click back in. The EU has been approached for comment. The Commission on Tuesday suspended a package of trade countermeasures targeting €93 billions' worth of American goods which was scheduled to take effect on 7 August, as it continues to negotiate a joint statement formalising the agreement struck by von der Leyen and Trump in Scotland.
