Santander, Lloyds face £1bn car finance claim for pushing customers into pricey deals
Santander and Lloyds face a new UK lawsuit over alleged “anti-competitive agreements” they had with car dealerships that pushed customers towards more expensive finance options when they were buying second-hand cars.
The claim, filed at the Competition Appeal Tribunal last month, targets three of the largest motor finance providers: Santander UK, Black Horse, which is part of Lloyds Banking Group, and Motonovo Finance.
The claim alleges that between 2015 and 2021 consumers were unknowingly charged higher interest rates “due to a network of anti-competitive agreements between providers of motor finance and automotive dealers”, where car dealers were given greater commission in return for getting customers to agree to finance deals that charged a higher rate of interest.
This so-called “discretionary commission” model was banned by the FCA in January 2021.
The ‘opt-out’ action, which means all eligible borrowers are automatically included in the case, estimates that as many as 1m consumers might be affected, and the total value of those claims could reach nearly £1bn.
Doug Taylor, a consumer advocate and the class representative, said: “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.”
Law firm Scott+Scott is representing Taylor and the collective action is backed by litigation funder Woodsford.
Lloyds said it was committed to ensuring customers have clear information to make informed decisions on the products they buy.
Santander and Motonovo Finance were contacted for comment.