The Supreme Court has granted permission to Close Brothers Limited and FirstRand Bank Limited to appeal Court of Appeal’s ruling

The headlines have once again been dominated by news about the motor finance industry. On 11^thDecember 2024 the Supreme Court granted permission for two motor finance lenders to appeal a pivotal Court ruling concerning commission arrangements in car finance agreements. This decision allows Close Brothers Limited and FirstRand Bank Limited (the owner of MotoNovo), the chance to overturn the Court of Appeal’s ruling back in October, which stated that the payment of a ‘secret’ commissions by finance companies to car dealers on finance deals, without the fully informed consent of their customers, was unlawful.

Permission to appeal granted bythe Supreme Court, also followed a request from the Financial Conduct Authority(FCA) for expedition in hearing the appeal (if allowed) as soon as possible, toassist in securing certainty for the motor finance market.

Jamie Patton, Managing Directorat Johnson Law Group, said:

“Whilst it’s a littlefrustrating for consumers who have already waited so long for clarity in thelaw, the fact that this matter is now set to be determined by the highest courtin the land will hopefully ensure there is definitive guidance and, for the firsttime in years, legal certainty.”

Following the decision, The FCAsaid:

“We previously wrote tothe Supreme Court asking it to decide quickly whether it will givepermission to appeal and, if it does, to determine the substantive appeal assoon as possible. This is because of the potential impact of any judgment on themotor finance market and the many consumers who rely on it. We are consideringwhether to formally intervene in the case to share our expertise to assist theCourt on the substantive appeal.”

A date has yet to set for theAppeal hearing but the Supreme Court has confirmed that it will take place inthe 2025 Hilary Term (between Monday 13^th January and Wednesday 16^thApril 2025.)

FCA Policy Statement: published19^th December 2024

The FCA has published its latestpolicy statement on motor finance claims in which it has now extended the pausefor financial firms to respond to complaints in respect of all types ofmotor finance commission arrangements to 4^th December 2025. 

Previously, the pause was only inrespect of discretionary commission arrangements (DCAs). This means that firmsnow have until after 4^th December 2025 to respond to all motorfinance commission complaints involving DCA and non-DCA matters. 

Under new rules set by the FCA,which come into force on 20^th December 2024, firms do not have toprovide final responses to motor finance non-DCA commission complaints receivedon or after 26^th October 2024 until after 4^thDecember 2025. For non-DCA commission complaints received before 26^thOctober 2024, firms have 8 weeks to respond.    

The FCA has also confirmed thatit plans to formally intervene in the Appeal case to the Supreme Court to shareits expertise and to assist the Court.

High Court Judicial ReviewDecision

On 17^th December 2024,following a Judicial Review requested by Clydesdale Financial Services (tradingas Barclays Partner Finance), the High Court upheld the outcome of a consumercomplaint considered by the Financial Ombudsman Service (FOS) relating to a DCAin a motor finance agreement.

The High Court was unequivocal inits confirmation that the use of DCAs is unfair, and that the consumer wasfully entitled to receive the compensation that she was awarded by FOS earlierthis year.

What does all of the above meanfor your complaint / claim?

Based on the Court of Appealruling back in October and the recent High Court Judicial Review decision, weremain confident that the prospects of success in respect of your claim ishigh. Things may however change following the outcome of the Supreme CourtAppeal, which we can probably expect in around 5-6 months’ time.  

If your claim relates to anundisclosed DCA then the new FCA rules (effective 20^th  December 2024) will not have any impact on yourclaim. This means that firms against whom DCA claims are made do not have toprovide a final response until after 4 December 2025. This is known as the‘pause’.

The pause now also applies tonon-DCA (non-discretionary commission arrangements) claims where a complainthas been lodged on or after 26^th October 2024.

If your claim is non-DCA and ithas been lodged before 26^th October 2024 then the pause doesnot apply and we would expect to receive a final response from the firminvolved within 8 weeks of the date of your complaint being lodged. If a finalresponse or no response is received after 8 weeks your claim can be referred tothe Financial Ombudsman Service (FOS) or you will have the option ofinstructing us to issue legal proceedings.

Given the impending Supreme CourtAppeal, which is expected to be heard by mid-April 2025, it would not be ourrecommendation to incur the cost of issuing legal proceedings, since anyproceedings issued at this point are likely to be ‘stayed’ (effectively put onhold) by the Court, pending the outcome of the Supreme Court Appeal. In otherwords, issuing legal proceedings will not produce a quicker outcome in respectof your claim.

It is also likely that the FOSwill defer any decision on your claim until after the Supreme Court has ruledin the Appeal.

We anticipate that the SupremeCourt will deliver its judgment following the Appeal in possibly May or June2025.

In the meantime, we will updateyou further if / when your claim has been submitted to the FOS or there are anyfurther significant developments.

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