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Lloyds Banking Group chief executive Charlie Nunn said the UK faces an “investability problem” after a court ruled it was unlawful for car dealers to receive commissions from motor finance providers.
The motor finance industry has been reeling since the Court of Appeal ruled in October that commissions were illegal unless the payments had been properly disclosed to the customer and consent had been given.
Industry executives and lawyers said the ruling upends the regulation that has governed the sector for years.
Lloyds Banking Group, which owns Black Horse, the UK’s largest car finance provider, had already set aside £450mn to cover the potential costs of an existing regulatory probe into certain commissions charged on car financing deals.
“What is unique here and unique for the UK relative to other economies [is that] we have a legal decision . . . that is at odds with the last 30 years of regulation,” Nunn told the FT Global Banking summit on Wednesday.
“Investors are telling us they’re really concerned about the uncertainty that . . . it creates an investability problem,” he added.
