Last minute preparations for Supreme Court ruling

Lenders and brokers have a week to put in place their final preparations, plans and contingencies for the Supreme Court ruling on commission disclosure in motor finance scheduled for Friday, 1^st August.

The judges have assessed three cases, and their verdict could have seismic repercussions for the industry and the wider UK economy. Register now to join Monday’s exclusive AFC/Shoosmiths webcast, sponsored by Odessa, providing independent analysis of the Supreme Court’s auto finance ruling and understand what it means for the future of the industry.

Rumours, both founded and unfounded, swirl in this vortex of uncertainty. One national newspaper has reported that the Government will intervene with retrospective legislation to avoid an outcome that cripples the motor industry. Other reports indicate that the unusual date of the verdict, after financial markets close for the weekend, is to give parties extra time to formulate a response. Secure Trust Bank has already made a strategic shift, exiting the consumer auto finance sector, in search of higher returns elsewhere.

Meanwhile, AFC’s legal partner, Shoosmiths, have shared their expert opinion on how best to prepare for a potential Financial Conduct Authority redress scheme, in what could become what could be one of the most significant consumer remediation exercises in recent UK financial history.

The role of Claims Management Companies in luring clients into making claims and then imposing ‘extortionate’ exit fees, has also made the headlines.

The cases understandably act like a black hole for boardroom bandwidth, but elsewhere the past month has seen a series of significant Government moves designed to stimulate the electric vehicle market.

A new £650m fund will support the purchase of new EVs that cost less than £37,000 with grants to the tune of £3,750, enough to subsidise 173,000 new battery-powered cars.

Only cars from brands committed to a Science-Based Target (SBT) for cutting emissions will qualify, in a move that appears designed to exclude Chinese-made EVs (in factories powered by coal-fired electricity).

The announcement of the grant brought current EV sales to a standstill, as buyers waited to see the small print, but MG has already reacted with its own £1,500 grant, anticipating that it will not qualify for the Government’s scheme.

The BVRLA has warned that focusing efforts on the new EV market and ignoring demand for used EVs risks exacerbating the sharp decline in used EV values. These have led to losses for lenders and jeopardise the UK’s transition to zero emission vehicles as leasing companies reflect rising depreciation costs in higher monthly rentals.

The association assembled a coalition of more than 30 companies calling for Government intervention in the used EV market.

EVs accounted for less than a quarter of new car sales in June, and 80% of motorists expect a Government U-turn on the 2030 end to the sale of new petrol and diesel cars. Even fleet adoption of EVs is far from assured, with nearly a third (30%) of UK fleets operating with 25% or fewer EVs, and 11% have yet to integrate a single EV into their operations, according to a new study.

The Government is intervening in the EV charging market, with a £63 million package to support public and depot charging infrastructure for lorries, vans and coaches. This is a relatively new area of investment for asset finance lenders – Aldermore Bank has just provided a £25m funding package to Osprey Charging.

Finance in the wider automotive sector is facing a difficult environment, with consumer finance volumes falling in May, although the average value of new business did rise modestly, suggesting consumers are financing more expensive vehicles or taking out higher-value finance agreements.