Lloyds Banking notes motor finance ruling by Court of Appeal

Lloyds Banking Group PLC on Monday noted the outcome of a motor finance case that saw a UK court side with consumers.

Lloyds Banking notes motor finance ruling by Court of Appeal

"The Court of Appeal has determined that motor dealers acting as credit brokers owe certain duties to disclose to their customers commission payable to them by lenders, and that lenders will be liable for dealers' non-disclosures," the Edinburgh-based lender said. Lloyds further noted that the lenders intend to appeal the decisions to the UK Supreme Court. The bank said it is assessing the potential impact of the decision. On the verdict, it said: "This sets a higher bar for the disclosure of and consent to the existence, nature, and quantum of any commission paid than had been understood to be required or applied across the motor finance industry prior to the decision." On Friday, the Court of Appeal ruled in favour of the appeals of three claimants, Johnson, Wrench and Hopcraft, against FirstRand Bank and Close Brothers Group PLC - the so-called Hopcraft case.

Court ruling reactions

In response, Close Brothers said it "will be temporarily pausing the writing of new UK motor finance business while we review and implement any relevant changes to our documentation and processes to ensure compliance with these new requirements." FirstRand Ltd said Friday: "This judgement finds that a fiduciary duty suddenly and retrospectively now likely applies to all providers of credit at point of sale which has far-reaching and materially negative implications for the motor finance industry and broader consumer finance sectors in the UK."