The Financial Conduct Authority (FCA) has expressed concerns over a recent Court of Appeal ruling regarding motor finance commission, noting that it risks excessive legal overreach. The ruling found that car dealers failed to disclose commission structures transparently to consumers. The FCA, in a submission to the Supreme Court, contends that treating car dealers as fiduciaries is inappropriate and could lead to significant uncertainty in financial markets. This case impacts a major portion of UK car purchases and may open the door to potential compensation claims of up to £44 billion for lenders.
The sweeping approach of the Court of Appeal in effectively treating motor-dealer brokers as owing fiduciary duties to consumers in the generality of cases goes too far.
This ruling could introduce widespread uncertainty across financial markets, leaving lenders exposed to potential compensation claims of up to £44 billion.
Industry leaders echoed concerns about 'financial chaos' if such legal duties were imposed without regulatory consultation.
The FCA’s intervention seeks to challenge the Court of Appeal's ruling by emphasizing that car dealers do not typically have a legal obligation to act as fiduciaries.
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