From CNBC: 2024-11-14 01:42:04

In London, the mist shrouds the towering 22 Bishopsgate in the City. The motor finance industry in Britain faces a crisis after a court ruling deemed car dealer bonuses from banks unlawful. Analysts predict a multi-billion-pound compensation scheme for consumers, drawing comparisons to the PPI scandal.

Britain’s Financial Conduct Authority is seeking to expedite a decision on allowing lenders to appeal the ruling, leaving banks in limbo. Lloyds and Barclays are most at risk, with uncertainty over which rules to follow. If upheld, the ruling could lead to a significant impact on the industry.

Analysts warn of a potential £28 billion downside for the motor finance sector if the Supreme Court upholds the verdict. Some lenders may exit the market, reducing choice and increasing prices for consumers. The ruling could also affect other types of lending, like premium finance, raising concerns across the industry.

Read more: UK car finance industry in crisis, with banks bracing for mega payouts