Sentinel Legal alleges that South African lender FirstRand 'funnelled' over 43% of interest charged on a single car finance agreement toward undisclosed commissions. A UK consumer rights law firm says a Supreme Court ruling in favour of affected consumers could unlock billions in compensation. The case has sparked concerns about the potential destabilisation of the motor finance industry.
Vehicle financiers warn that potentially astronomical claims resulting from the UK probe could have far-reaching consequences for the industry and cause many businesses to shut their doors. Picture: AdobeStock
According to Sentinel, a Supreme Court ruling in favour of affected consumers could unlock billions in compensation, forcing major changes in the car finance sector.“With an estimated 31.7 million agreements affected, millions of consumers could step forward with claims,” it says in a statement. The appeal court ruled that FirstRand’s disclosure of commission payments was inadequate to ensure the customer was aware that a commission was paid.
“In one case involving FirstRand Bank, documents revealed that a staggering 43.66% of the total interest charged on a car finance agreement was funnelled into undisclosed commissions. Despite this damning evidence of exploitation, the bank continues to deny any wrongdoing.” FirstRand, in its reaction to the Supreme Court ruling last year, also flagged the “far-reaching and materially negative” implications for the motor finance industry and the broader consumer finance sectors in the UK.
CAR FINANCE COMMISSION CONSUMER RIGHTS LEGISLATION FINANCIAL RISK
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