Supreme court allows appeal in £30bn car loan mis-selling case

The supreme court has granted permission for two car lenders to appeal against a landmark ruling on motor finance commission payments that has left firms fearing a potential £30bn compensation bill.

- Kalyeena Makortoff

The decision gives the Close Brothers and MotoNovo owner FirstRand a chance to overturn a shock ruling by the court of appeal in October which said that paying "secret" commission to car dealers - without disclosing the sum and terms of that commission to borrowers - was unlawful.

The court of appeal decision went beyond existing City regulations and investigations by the Financial Conduct Authority (FCA) and opened the door to a fresh flood of claims that ratings agency Moody's says could now cost lenders up to £30bn.

News that the supreme court had accepted the case bolstered motor lenders' shares. Close Brothers jumped as much as 8% while Lloyds Banking Group, which owns the Black Horse car loans business, rose 4%, and Barclays gained 1.6%.