Britain’s highest court Friday largely overturned a lower court’s ruling that certain car finance agreements were unlawful, a decision likely to bring a sigh of relief among lenders and limit the scale of compensation payments.
A Supreme Court panel of five judges sided with lenders on two of the three issues at hand, finding that they are effectively not liable for hidden commission payments to dealers. It said there was no bribery involved in the purchase arrangements and that dealers did not have a legal obligation that required them to act only in the customers’ interest.
“No reasonable onlooker would think that, by offering to find a suitable finance package to enable the customer to obtain the car, the dealer was thereby giving up, rather than continuing to pursue, its own commercial objective of securing a profitable sale of the car,” the judges said.
As a result, lenders are expected to be spared making compensation payments to millions of people who had taken out car finance plans that industry experts said could have cost them tens of billions of pounds. Banks have been preparing to pay out compensation with Lloyds, the U.K.’s biggest car finance provider through its Black Horse arm, having set aside over 1 billion pounds ($1.3 billion).
