Banks may have to pay tens of billions of pounds if the British Supreme Court confirms a judgment ruling on controversial car loans is illegal, in a case from April.
These loans have prompted car dealers to offer higher interest rates in exchange for a higher committee, without sufficiently informing borrowers.
Association of consumers who! estimated that millions of drivers would become eligible for remuneration if the highest judicial authority in the United Kingdom is associated with borrowers.
However, the government sought to intervene in the case in the concerns about economic benefits.
“Such a substantial sum could limit the capacity and the will of the banks to lend and give a credit at a time when the economic prospects remain uncertain,” said AJ Bell’s investment director, Russ Mold.
“This is perhaps the reason why the government is trying to intervene,” he added.
Marcus Johnson is one of the applicants whose case is considered by the Supreme Court.
He contracted a loan in 2017 when he bought a Suzuki Swift from a car dealer in Cardiff, in Wales for £ 6,500 ($ 8,400) – ignoring that interest paid on loan would finance a commission of more than £ 1,600.
In October, the Court of Appeal ruled in favor of Johnson, ordering the South African Bank First to reimburse the Commission plus interest – aroused panic in the finance sector.
Now, the Supreme Court will hear its case on April 1, as well as another similar case against Firsttrand and a counter British Bank Close Brothers.
If the court is seated by borrowers after the three -day hearing, it will establish a precedent for similar cases across the country, which can suspend billions of compensation.
“In each of these three linked calls, the applicants were financially non -sophisticated consumers on relatively low income,” said the Supreme Court in its summary of the case.
He rejected the government’s attempt to intervene.
44 billion sterling pounds
In preparation for the decision, British banks have canceled considerable sums, including the Lloyds Bank, which affected nearly 1.2 billion pounds Sterling.
Which! Estimated that it could cost the banks up to 16 billion pounds sterling, while other analysts expect the sums is higher, those of HSBC suggesting that it could reach 44 billion pounds sterling.
This “would put it on a scale similar to the assurance scandal against payments protection (PPI), where the main British lenders on the street High Street would have paid some £ to 50 billion pounds sterling between them,” said Mold.
The Financial Conduct Authority prohibited unknown commissions in 2021 and launched a separate investigation into practice at the beginning of last year.
The financial guard dog plans to wait for the Supreme Court decision before deciding to start an automatic compensation program.
“Even if the Supreme Court confirms the judgment of the Court of Appeal, it could act to limit and reduce payments of remuneration, and this could well represent the best case for lenders,” added MMOD.
This story was initially presented on Fortune.com
