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Lloyds businesses in trouble for overcharging car finance
Three Lloyds businesses have been accused of overcharging customers for taking out loans on used cars between 2015 and 2021. As a result, they are facing High Court action.
The three lenders in question are Black Horse, Santander and MotoNovo Finance, and they control over half of the UK's car finance sector, so there's a strong chance that you may have been affected across the seven years.
They are accused of applying excessive interest on customers' car finance loans of almost £1 billion in total. Of that amount, it's claimed Black Horse added £624m, MotoNovo Finance £209m, and Santander £166m.
Allegations against the three lenders
Not only does it appear that the lenders overcharged customers' interest rates, but as a result, credit brokers were getting higher commissions than they would have if the figures were correct.
The action against the three businesses alleges that customers, against their will or knowledge, were being charged higher rates as a result of an anti-competitive network agreement between dealerships and finance providers.
The Financial Conduct Authority (FCA) abolished discretionary commissions such as the work in this case in 2021.
What's been said, and what happens next?
Doug Taylor, Enfield Labour councillor is leading the High Court action, and he told the Daily Telegraph that customers had been taken advantage of by these businesses.
"Affected consumers unknowingly paid more for their car loans because of the way these companies incentivised dealers,” he said.
A spokesperson for Black Horse said: "We are committed to ensuring customers have clear and transparent information so they can make informed decisions about the products they choose.
"Following the FCA’s motor finance market review, new rules were set out for the industry in 2021, which we have implemented. We continue to comply with regulatory requirements that apply in relation to the payment of commission and the disclosure of commission to customers.”
The three businesses have appealed, and the High Court will decide whether the action proceeds or gets thrashed out.