Lloyds Banking Group has been accused of unlawfully taking advantage to “overcharge” drivers by hundreds of millions of pounds on car finance, in a landmark class action at the High Court
Britain’s biggest high street bank, alongside rivals Santander and MotoNovo Finance, is alleged to have charged excessive interest on a million finance deals between 2015 and 2021. The overall value of the High Court claims against the trio is estimated at £1bn.
Car dealers and credit brokers allegedly sold finance at higher interest rates in return for higher commission from the lenders. The Financial Conduct Authority banned such “discretionary commission” incentives in 2021, after finding that individual buyers were paying up to £1,100 over the odds on a £10,000, four-year finance package.
Now three of Britain’s biggest motor finance providers are facing an attempt to recoup money for drivers. Lloyds-owned Black Horse, Santander UK and MotoNovo Finance control 57pc of the UK market for car finance.
Black Horse is facing claims of around £624m for its market share of 35pc, while Santander UK and MotoNovo Finance could owe customers £166m and £209m respectively.
The claims argue that consumers were unknowingly charged higher interest rates due to a network of anticompetitive agreements between car finance providers and dealers.
All drivers who bought used cars between October 1 2015 and January 27 2021 with finance from any of the three providers will be entitled to compensation if the claims are successful.
Doug Taylor, a consumer champion and Labour councillor in north London, who is leading the campaign, alleged that Black Horse, MotoNovo and Santander “took advantage of their customers”.
He said: “Affected consumers unknowingly paid more for their car loans because of the way these companies incentivised dealers.
“With this legal action, I am standing up for people across the UK who have been affected by the actions of these companies, seeking justice and compensation for the financial losses they have suffered.”
