Close Brothers and FirstRand To Appeal UK Court Ruling on Motor Finance Disclosure Duties

High Court Judge Declares Motor Finance Disclosure Duties Set Out in FCA Guidance Unenforceable

Motor Finance Providers ordered to pay costs and face potential compensation claims

Motor finance providers Close Brothers and FirstRand are set to appeal a High Court ruling that found key disclosure duties set out in Financial Conduct Authority (FCA) guidance are unenforceable. The judgment, handed down by Mr Justice Saini on 13 January 2023, has sent shockwaves through the motor finance industry and could have far-reaching implications for consumers.

The case was brought by the Financial Conduct Authority (FCA) against Close Brothers and FirstRand, both of which are major players in the UK motor finance market. The FCA argued that the lenders had failed to provide customers with sufficient information about the risks and costs of motor finance agreements, in breach of FCA guidance.

Mr. Justice Saini agreed with the FCA that Close Brothers and FirstRand had breached the FCA’s guidance. However, he found that the guidance itself was not legally binding and therefore could not be enforced through the courts.

The FCA has said it will carefully consider the implications of the judgment. The outcome of the appeal could have a significant impact on the future of motor finance regulation in the UK.

Why is this case important?

This case is important because it has implications for the motor finance industry and for consumers.

For the motor finance industry,

The judgment means that the FCA’s guidance on motor finance disclosure is not legally binding. This could lead to some lenders becoming less diligent in their approach to providing information to customers.

For consumers,

The judgment means that they may have less protection when taking out motor finance agreements. They may not receive all the information they need to make an informed decision about whether to take out a loan.

What should consumers do?

If you are thinking of taking out a motor finance agreement, it is important to shop around and compare different lenders. You should also make sure you understand the terms and conditions of the agreement before you sign it.

If you have already taken out a motor finance agreement and you are concerned that you were not given all the information you needed to make an informed decision, you may be able to make a complaint to the Financial Ombudsman Service.

Conclusion

The outcome of the appeal could have a significant impact on the future of motor finance regulation in the UK. In the meantime, it is important for consumers to be aware of the risks of motor finance agreements and to make sure they understand the terms and conditions before they sign up.