UK Supreme Court ruling could sharply cut bank compensation liabilities
The post UK Supreme Court ruling could sharply cut bank compensation liabilities appeared on BitcoinEthereumNews.com. Market experts have scaled back their forecasts on the potential compensation banks might owe consumers as the UK Supreme Court prepares to deliver a highly anticipated judgment on hidden commissions tied to car loans. The ruling, expected this Friday, follows an October decision by the Court of Appeal that triggered a wave of compensation claims from car buyers who said they were misled by undisclosed commissions paid by banks to dealerships. The case has since become a flashpoint for the UK financial sector, with billions of pounds potentially at stake. Supreme Court ruling could sharply cut bank compensation liabilities However, analysts now believe the Supreme Court could limit the scope of the earlier judgment, reducing the estimated financial hit to banks and likely curtailing the ruling’s ripple effects across other commission-based industries. “There has been a shift downwards in consensus estimates of redress costs for banks by about 20 per cent,” said Benjamin Toms, analyst at RBC Capital Markets. He added that growing sentiment among legal experts suggests the top court may partially reverse the Court of Appeal’s position. Toms recently revised his estimates, lowering the projected industry-wide compensation cost — spanning banks and non-banks — by 30%, down to £11 billion. That figure, he noted, remains “well below consensus expectations.” Jefferies banking analyst Jonathan Pierce also expects a more favourable outcome for lenders. He believes the potential liability for Lloyds Banking Group, the UK’s largest car finance provider through its Black Horse arm, could fall from £4 billion to no more than £2 billion. Pierce, who attended the April Supreme Court hearings, pointed out that judges appeared to scrutinize key issues like fiduciary duty and dishonest assistance — suggesting a narrower interpretation could emerge. HSBC had previously estimated the scandal could cost lenders up to £44 billion, including £10…
The post UK Supreme Court ruling could sharply cut bank compensation liabilities appeared on BitcoinEthereumNews.com.
Market experts have scaled back their forecasts on the potential compensation banks might owe consumers as the UK Supreme Court prepares to deliver a highly anticipated judgment on hidden commissions tied to car loans. The ruling, expected this Friday, follows an October decision by the Court of Appeal that triggered a wave of compensation claims from car buyers who said they were misled by undisclosed commissions paid by banks to dealerships. The case has since become a flashpoint for the UK financial sector, with billions of pounds potentially at stake. Supreme Court ruling could sharply cut bank compensation liabilities However, analysts now believe the Supreme Court could limit the scope of the earlier judgment, reducing the estimated financial hit to banks and likely curtailing the ruling’s ripple effects across other commission-based industries. “There has been a shift downwards in consensus estimates of redress costs for banks by about 20 per cent,” said Benjamin Toms, analyst at RBC Capital Markets. He added that growing sentiment among legal experts suggests the top court may partially reverse the Court of Appeal’s position. Toms recently revised his estimates, lowering the projected industry-wide compensation cost — spanning banks and non-banks — by 30%, down to £11 billion. That figure, he noted, remains “well below consensus expectations.” Jefferies banking analyst Jonathan Pierce also expects a more favourable outcome for lenders. He believes the potential liability for Lloyds Banking Group, the UK’s largest car finance provider through its Black Horse arm, could fall from £4 billion to no more than £2 billion. Pierce, who attended the April Supreme Court hearings, pointed out that judges appeared to scrutinize key issues like fiduciary duty and dishonest assistance — suggesting a narrower interpretation could emerge. HSBC had previously estimated the scandal could cost lenders up to £44 billion, including £10…
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