Car Finance Chaos in the UK: Customers Struggle to Collect Cars After Court of Appeal Decision

The recent Court of Appeal decision in the UK has sent shockwaves through the car finance industry, leaving many customers unable to collect their cars and dealers struggling to find finance for new business. The ruling stated that brokers cannot receive commission from lenders without the customer’s fully informed consent, leading to a pause in payments from many finance companies.

Car dealers are now rushing to implement new procedures to disclose commission payments to customers and get their approval before handing over cars. This sudden change has caused chaos in the industry, with some dealers fearing financial armageddon if the issues are not resolved quickly.

Many finance companies have paused lending, including big names like BMW, Secure Trust Bank, and Santander. The Finance and Leasing Association has called the decision ‘unusual’ and ‘very unexpected,’ and is working with the Treasury and the FCA to find a solution.

Despite the uncertainty, some industry experts believe that disclosing commission payments to customers is not a major issue and can be easily explained, similar to how mortgage brokers operate. However, the lack of clarity on what the new paperwork should look like is causing confusion and delays in the industry.

Overall, the situation is described as chaotic by industry leaders, with many finance companies scrambling to figure out the right way to comply with the ruling. The hope is for the regulator to provide clarity on the implications of the decision to ensure a transparent and functioning market for all involved.