Law360 quotes Joe Edwards on the significant implications of the Supreme Court's review of commission payments in the motor finance industry
min readBritain's highest court will consider on Tuesday whether hidden commission payments
made by lenders to car dealers were unlawful in a case that could leave banks on the hook for billions of bounds in damages and have legal ramifications far beyond motor finance.
The Supreme Court is to revisit the law on fully undisclosed commissions and partially undisclosed commissions, which engages the concept of dishonest assistance.
Joe Edwards, Senior Associate, shares his thoughts with Law 360:
In terms of the latter, lenders are often reliant on the actions of the broker, i.e. the car dealer, and the Supreme Court will have to grapple with the fact that the car buyer often has very little interaction with the lender.
The Supreme Court is being asked to consider whether car dealers have a fiduciary duty to provide information, advice or recommendations when they arrange loans for vehicle purchases.
If so, were the payments of commissions by the lenders to the car dealers
secret such that the lenders become primary wrongdoers?
The justices will also examine whether it is akin to a bribe for lenders to pay commissions to dealerships. The decision has the potential to extend well beyond the wrongful selling of car finance.
"Many business models rely on, or at least involve, the payment of commissions.The Court of Appeal decision has thrown those arrangements into the spotlight, particularly where these payments could amount to bribes."
Read the full piece in Law 360 here.
