The UK Supreme Court’s forthcoming ruling regarding undisclosed commissions received by brokers is poised to substantially affect both the automotive industry and lending institutions.

An appeal from two automotive lenders, Close Brothers and MotoNovo, is set to be reviewed by the Supreme Court in April. This follows a landmark ruling by the Court of Appeal concerning motor finance commission payments, which has raised apprehensions within the industry regarding possible liabilities for compensation that could reach billions of pounds.

Yesterday, the Supreme Court declined a request from Finance Minister Rachel Reeves to intervene in the proceedings. In January, the Treasury expressed apprehension that a Court of Appeal ruling issued last October, if upheld by the Supreme Court, could hinder consumers’ ability to secure car loans. The Treasury contended that any compensation for customers should be commensurate with the actual losses incurred.

In addition to the potential scale of the compensation claims, the Treasury’s submission to the Supreme Court highlighted worries that ongoing uncertainty could jeopardize the UK’s competitive standing.

In October, the Court of Appeal determined that the motor finance sector was liable for “hidden” commissions following an investigation into past sales practices. The Court ruled that it was unlawful for lenders to pay commissions to dealers without obtaining customer consent. Moreover, it stated that customers who were not made aware of such arrangements should receive compensation, leading to projections that the industry might face payouts of up to 30 billion pounds.

The Supreme Court will deliberate on whether to uphold this pivotal ruling concerning hidden motor finance commission arrangements during a hearing scheduled for 1 to 3 April 2025.

A spokesperson for the UK Supreme Court indicated that the Treasury’s application was denied, while the application from the Financial Conduct Authority, the UK regulator, was approved. The justices did not provide a rationale for refusing the Treasury’s application.

Additionally, the Supreme Court has denied permission to Consumer Voice, an advocacy group co-founded in early 2023 by Alex Neill and Nikki Stopford, aimed at facilitating consumer access to justice.