Court of Appeal car finance ruling went “too far”, says FCA

In written submissions, the UK’s financial regulator also called on the Supreme Court to overturn the ruling. The submission was made on the first day (1 April) of a three-day hearing that will decide whether the car finance ruling should be overturned.

The regulator said: “The sweeping approach of the Court of Appeal in (effectively) treating motor dealer brokers as owing fiduciary duties to consumers in the generality of cases goes too far.”

However, it added: “It is respectfully suggested that the Court should exercise a degree of caution before accepting the appellants’ invitation to jettison the tort of bribery or the ‘disinterested’ duty, as that may leave a lacuna in the law and lead to the distortion of established principles.”

The Supreme Court case, brought by Close Brothers and MotoNovo owner FirstRand, follows the Court of Appeal’s ruling in October that it was unlawful for lenders to pay “secret” commissions to car salesmen for persuading customers to take out motor finance loans.

Following the ruling, the FCA applied to intervene in the case alongside the Treasury over concerns that the judgment risks destabilising Britain’s banking industry. The Treasury, meanwhile, said a ruling against lenders could “adversely affect” the UK’s reputation as a place to do business, “with a consequent impact upon economic growth.”

The Supreme Court approved the FCA’s application while blocking the Treasury’s request to step into the case.

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