UKʼs car finance sector got hit-hard last week when an Appeal Court made dealers tell buyers about their commission deals. This caused big trouble in car sales business
Multiple finance companies stopped giving loans in past few days (including Mann Island MotoNovo and others) which made the whole car-buying process more difficult. Lloyds Bank through its Black-Horse division had to change its whole system: they removed all dealer bonuses
The situation is extra-tough because around 9 out of 10 car buyers need loans; this affects lots of people like nurses teachers and other workers who need cars for their jobs. William Chalmers from Lloyds had a quick-talk with investors to explain whats going on
- Mann Island stopped loans
- MotoNovo pulled out
- V12 paused lending
- Zopa stopped financing
- Close Brothers halted operations
- Honda blocked some car collections
The court said dealers must put customers first: which means telling them about any money they get from lending deals. Treasury folks met with FCA (the money-watchdog) on Oct 30th to fix this mess; they might extend their pause on checking customer complaints until late-2025
Car dealers now have a special duty to their customers — this includes showing all fees commissions and other payments they get from banks. The FCA boss Nikhil Rathi is thinking about making the complaints-pause cover all types of dealer payments; not just the bonus ones