Honda halts car lending in response to ruling

October 30, 2024

Honda has pulled its car financing options for customers in response to last Friday’s landmark court ruling against banks and lenders, including Close Brothers.
The industry is reacting to a Court of Appeal ruling stating that car finance commissions cannot be paid out to dealers unless customers are informed about them.
The Japanese manufacturer insists that, until further notice, customers cannot collect their new cars if they have been financed by Honda.

Close Brothers pulled its lending on Friday and said it would be appealing to the UK Supreme Court. The effects of the ruling are industry-wide, and the full implications are being assessed. Meanwhile, motor-finance lenders across the UK must now consider whether they can undertake finance business, before their systems are updated to comply with the ruling.

The Friday judgement states that full disclosure of commissions must be made, and the informed consent of the customer to those payments must be obtained.

Kavon Hussain of Consumer Right Solicitors, who brought the case to the Court of Appeal, said: “Unknown to customers, lenders systematically incentivised car dealers acting as credit brokers to place finance with them by paying commissions that were not disclosed to the consumer.

“These hidden commissions paid to dealers meant that the consumer could pay anything from a few hundred pounds to many thousands extra to a lender through interest payments, for the lender to then pay this to the dealer.”