With 9 in every 10 car purchases being bought using finance these days[1], many consumers have been eagerly following the Supreme Court case on the matter which came to an end last week when the much-anticipated judgment was handed down.
The case challenged the fact that finance payments included hidden fees for dealer commissions as being bribery and secret profits. The Justices however found against this on 2 of the 3 cases that it heard confirming that the dealers were ‘entitled to make a profit’. The one case that was upheld, was due to 55% of the cost of the credit being deemed as an ‘unfair’ commission.
This case has been ongoing for some time with a previous decision being made in October that could have led to consumer pay outs. The latest appeal of this case caught the attention of consumers, lawyers and many more, keen to hear the collateral decisions on the underlying principles. The judgment explored elements of bribery, secrecy and other controversial areas from within the trade.
Unfortunately following the decision, the courts are not likely to be awarding compensation for such cases. However, the Financial Conduct Authority have made their own decision to offer some compensation through a scheme that they intend to put together. They have been following this case and running their own investigation alongside with the aim of producing a scheme that compensates where hidden commissions was not disclosed.
The FCA are advising against individuals seeking help from Claims Management Companies (CMC) in the meantime as the scheme should either require lenders to reach out to individuals or automatically pay them as required. Which for the individual is cost free, whereas the CMCs may claim as much as 30% of the payout from you.
This was an interesting outcome that will have disappointed many consumers, however we are yet to see the long-term effects of the decision and where the line will be drawn as to the standard of a successful claim. The application of this decision is one that will be followed by solicitors, consumers and the dealers.
[1] Car finance ruling has potential to trigger millions of claims - BBC News
