Close Brothers has been granted permission by the UK’s highest court to appeal against a landmark ruling on hidden motor finance commission, sending bank shares higher on Wednesday.
The banking group submitted an application to the Supreme Court to challenge an earlier judgment in the Court of Appeal.
It will mark the latest development in the looming crisis facing the motor finance industry, with major lenders on the hook for potentially billions of pounds’ worth of compensation.
Close Brothers will have the chance to overturn October’s ruling.
That said it was unlawful for car dealers to receive commission from lenders without receiving the customer’s fully informed consent to the payment.
The decision opened the door for a potentially fresh wave of complaints from consumers who think they may have been mis-sold car finance in previous years.
Shares in Close Brothers rose more than 6% on Wednesday, and Lloyds was up by more than 4%.
Close Brothers paused new UK motor finance lending following the ruling, but said last month it had resumed a “significant proportion” of the business.
The Financial Conduct Authority (FCA) is carrying out a separate investigation into so-called discretionary commission arrangements, which saw dealers fix higher interest rates on credit agreements, meaning consumers were charged more without knowing.
The regulator said its work is likely to be affected by the court judgments, and the potential effect on the market and consumers.
Adrian Dally, director of motor finance at the Finance & Leasing Association, said: “Permission to appeal is very good news indeed.
“The expedited process will give the motor finance sector the needs certainty it needs.”
Close Brothers said it would not be commenting further on the ongoing appeals process.