UPDATE 3-UK’s Close Bros granted permission to appeal motor finance ruling

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Supreme Court grants permission to appeal car finance ruling

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Ruling raised prospect of expensive redress scheme for banks

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Close Bros shares jump as much as 12% on permission to appeal

(Adds Close Bros, FirstRand comments in paragraphs 4-5)

LONDON, Dec 11 (Reuters) – British lender Close Brothers was on Wednesday granted permission to appeal a ruling that motor finance brokers must fully inform customers about commissions on car loans, amid a looming multibillion-pound consumer redress scheme.

The United Kingdom’s Supreme Court said it had granted Close Bros and South African lender FirstRand permission to appeal against October’s landmark ruling by the Court of Appeal.

Close Bros’ shares, which have fallen about 30% since the ruling, jumped as much as 12% following Wednesday’s decision. Shares in banking group Lloyds, which have also suffered, gained around 4%. FirstRand stock was little changed.

Close Bros said it would not comment further on an ongoing appeal process, while FirstRand said it was pleased with the decision.

The Supreme Court said the appeal would be heard in early 2025. Britain’s Financial Conduct Authority (FCA) said in a statement that it was “considering whether to formally intervene in the case to share our expertise to assist the court”.

The FCA had urged the Supreme Court in November to expedite its decision on permission to appeal, after the Court of Appeal ruled it was unlawful for car dealers to receive a commission from banks without obtaining the customer’s informed consent.

That ruling came as the FCA considered implementing a consumer redress scheme linked to motor finance commissions, which could total around $21 billion.

Close Bros, which had paused writing new motor finance business following the Court of Appeal’s ruling, in November said potential redress claims would impact its 2025 financial guidance.

While it did not disclose an amount, other British lenders such as the UK arm of Spain’s Banco Santander and Lloyds have set aside 295 million pounds ($376 million) and 450 million pounds respectively to cover possible costs related to the matter.

The Supreme Court’s decision is a sign of hope for lenders that the Court of Appeal’s ruling could yet be overturned, saving the industry from a multibillion-pound hit.

Adrian Dally, Director of Motor Finance at the Finance & Leasing Association, said the decision was “very good news indeed”, adding: “The expedited process will give the motor finance sector the certainty it needs.”

($1 = 0.7854 pounds) (Reporting by Yamini Kalia in Bengaluru and Sam Tobin in London; Editing by Maju Samuel and Mark Potter)

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