The car finance mis-selling scandal continues to escalate, with Close Brothers becoming the latest lender to set aside a significant sum for potential mis-sold car loan compensation. The FTSE 250 lender has allocated up to £165 million in provisions, acknowledging the financial risk posed by hidden commission payments on motor finance deals.
The Growing Car Finance Scandal
Close Brothers announcement follows a ruling by the Court of Appeal, which deemed it unlawful for car dealers to receive undisclosed commissions on motor finance agreements without a customer informed consent. This decision has triggered a wave of consumer complaints, with many drivers now seeking refunds for excessive interest charges.
The issue extends beyond Close Brothers, with several other major lenders also bracing for potential compensation payouts:
- Lloyds Banking Group (Black Horse Finance) £450 million provision
- Santander UK £295 million provision
- Barclays £90 million provision
Industry experts predict the total cost of compensation across the motor finance sector could exceed £10 billion as more affected customers come forward.
What Does This Mean for Car Loan Customers?
The Financial Conduct Authority (FCA) is currently reviewing car finance agreements to assess the scale of the mis-selling. Many customers were unknowingly paying higher interest rates due to commission-based sales tactics used by car dealers.
If you took out car finance before 2021, you might have been mis-sold your car loan and could be entitled to compensation. Affected agreements typically involve:
- Hidden commission payments increasing loan costs
- Unexplained interest rate hikes linked to dealer incentives
- Failure to disclose financial arrangements impacting affordability
Close Brothers and the Supreme Court Appeal
Close Brothers is appealing the Court of Appeal ruling and is set to challenge the decision at the UK Supreme Court in April. The company has warned investors that its final compensation bill could be higher or lower than the £165 million set aside, depending on the Supreme Court verdict. Despite the financial hit, Close Brothers reassured stakeholders that it remains financially stable, stating:
The group continues to evaluate a range of additional management actions to further optimise risk-weighted assets, including risk transfer of other portfolios and a continuous review of our businesses.â€
Have You Been Mis-Sold a Car Loan?
If you believe you were affected by undisclosed commissions or unfair car finance agreements, you could be eligible for a mis-sold car loan compensation claim.
At Hutcheon Law, our specialist solicitors have extensive experience handling mis-sold car finance claims, ensuring that victims of unfair lending practices receive the compensation they deserve.
Why Choose Hutcheon Law?
Expertise in mis-sold car finance claims
- No win, no fee representation
- Proven success in securing compensation for unfair lending
- Completely confidential and hassle-free claims process
For more details on how to claim for mis-sold car finance, visit Hutcheon Law’s dedicated claims page today.
Related Articles You May Find Useful
For further insights into the car finance scandal, check out these helpful guides:
Mis-Sold Car Leases: What You Need to Know About the Expanded Complaints Process
Don’t Wait to Start Your Claim Today
If you suspect you overpaid on car finance due to hidden commission payments, now is the time to act. Hutcheon Law offers free, confidential advice on mis-sold car loan compensation claims.
Contact Hutcheon Law today and take the first step toward claiming what is rightfully yours.
