The Financial Conduct Authority (FCA) are set to launch a consultation review over compensation for the car loan scandal, after the Supreme Court’s verdict on Friday. Up to £18bn could be made available for consumers, with banks on the line for repayment for next year. It is estimated that claimants may end up with less than £950 each, with millions of customers potentially eligible. Bank shares rose on the news on Monday.
Later this week, the Bank of England’s Monetary Policy Committee will be announcing its latest interest rates decision, with rates widely expected to be cut to 4 per cent in the face of rising unemployment.
Meanwhile, the FTSE 100 has opened on Monday slightly higher following a sharp fall at the end of last week, the result of Donald Trump’s tariffs soon coming into effect and being announced with further punitive measures on some nations.
Follow The Independent’s live coverage of the latest stock market and business news here:
Business news and car loan scandal live - Monday 4 August
- Lenders' shares shoot up on car finance compensation ruling - Close Brothers surges 20%
- FTSE 100 rises as stock markets start recovery from last week's fall
- Expert says car finance compensation won't be a repeat of PPI scandal
- Industry leader says £18bn payout will be 'completely impractical'
- Musla awarded $29bn share payout from Tesla
BP confirms biggest oil and gas field discovery in 25 years
15:00 , Karl MatchettEnergy giant BP has announced its biggest oil and gas field discovery in 25 years after a drilling off the coast of Brazil.
The company’s vice president for oil production, Gordon Birrell, said it was a “significant discovery” and the largest since 1999, when a giant gasfield in the Caspian Sea was discovered. It is expected to contain a mix of gas and oil as well as condensate, which is a liquid form of natural gas.
The size of the field in the Bumerangue prospect is more than 300 square kilometres – about three times the size of central Paris.
Business news live - Monday 4 August
08:18 , Karl MatchettGood morning and welcome to our business live blog covering the usual company news, FTSE 100 and stock market movements and everything regarding your money.
Today we also take on board the car loan scandal and the latest movements there.
FTSE 100 in small rise after opening
08:23 , Karl MatchettWe’ll get into the car loan mis-selling latest momentarily but let’s quickly check into money markets first after opening. Investors will be watching stock market levels this week after most took a sharp downward turn at the end of last week.
That came as Trump’s original tariff deadline came and went with another extension and another raft of new rates for some countries.
This morning the FTSE 100 has risen 0.05 per cent in the opening minutes of trading, but it’s very much a timid-feeling position.
The German DAX is up 0.45 per cent and the Euro Stoxx 50 is up 0.64 per cent.
Car finance mis-selling payout scheme could cost billions, says FCA
08:38 , Karl MatchettA compensation scheme to pay out to drivers who were mis-sold car loans could cost as much as £18bn, the financial regulator has said.
Millions of drivers were denied payouts after the Supreme Court ruled on Friday (1 August) that lenders are not liable for hidden commission payments in car finance schemes.
Two lenders, FirstRand Bank and Close Brothers, challenged a Court of Appeal ruling that the “secret” commission payments paid to car dealers as part of finance arrangements made before 2021 – without the motorist’s fully informed consent – were unlawful.
After the Supreme Court’s decision the bulk of the claims will therefore not go ahead, with only the most serious claims eligible for compensation. The £18bn figure is a significant drop from the £45bn if the Supreme Court upheld the ruling in full.
More details on that here from Alex Croft:
Car finance mis-selling payout scheme could cost billions, says FCA
Share prices surge for Lloyds and Close Brothers on car finance ruling
08:56 , Karl MatchettGiven the car finance ruling came down from the Supreme Court on Friday after markets closed, today is the first moment of reaction in share price terms.
As the total compensation which might be paid out is on the lower than expected end, the share prices for lenders who may have to pay out the compensation have shot up accordingly.
Lloyds are up 6 per cent in early trading, while FTSE 250 firm Close Brothers have rocketed more than 20 per cent.
Most set to get less than £950 compensation as FCA begin review
09:07 , Karl MatchettThe Financial Conduct Authority (FCA) suggests most individuals will get less than £950 compensation, based on total payouts.
A statement on Sunday said the FCA will start a consultation period on an “industry-wide compensation scheme” which will now run for some time.
The FCA also said they will come up with rules for determining compensation levels.
Those rules will determine “how lenders should consistently, efficiently and fairly decide whether someone is owed compensation and how much”
The FCA will also ensure firms are following those set down rules and act accordingly if they’re not.
Nikhil Rathi, chief executive of the FCA, said:
“It is clear that some firms have broken the law and our rules. It’s fair for their customers to be compensated. We also want to ensure that the market, relied on by millions each year, can continue to work well and consumers can get a fair deal.”
“Our aim is a compensation scheme that’s fair and easy to participate in, so there’s no need to use a claims management company or law firm. If you do, it will cost you a significant chunk of any money you get.”
“It will take time to establish a scheme but we hope to start getting people any money they are owed next year.”
Martin Lewis explains how to claim car finance mis-selling compensation
09:23 , Karl MatchettFinancial expert Martin Lewis has advised on the next steps for drivers who were mis-sold car loans, after a financial regulator said the industry could pay out up to £18bn in compensation.
The Financial Conduct Authority is launching a compensation consultation which will determine how much is paid out to millions of people who paid more interest than they knew about.
A Supreme Court ruling on Friday (1 August) found that lenders are not liable for hidden commission payments in car finance schemes, a decision which means most of the claims will not go ahead, but only the most serious claims will be eligible for compensation.
But many cases in a separate strand of the car finance mis-selling case, which was not part of the Supreme Court ruling, are still likely to receive payouts, Mr Lewis explained.
More here from Alex Croft:
Martin Lewis explains how to claim car finance mis-selling compensation
Drivers should be ‘very pessimistic’ over car finance claims, say lawyers
09:40 , PA - Henry Saker-ClarkDrivers should be “very pessimistic” about getting any compensation for taking out a car loan after a landmark ruling by the Supreme Court, experts have warned.
Industry analysts also said on Friday that banks will “breathe a sigh of relief” after the Supreme Court ruled they are not liable for hidden commission payments in car finance schemes.
Nevertheless, the financial watchdog has said it is still considering whether to launch a redress scheme for consumers who potentially receive compensation.
Report in full here.
Major lenders see share prices surge after car finance mis-selling ruling
09:59 , Karl MatchettShares in major lenders soared on Monday morning as businesses and markets reacted to the Supreme Court ruling on car finance mis-selling.
The ruling on Friday came after stock markets closed, meaning market reaction hit at the start of the new week – with Lloyds Bank rising more than 7 per cent and Chase Brothers shares shooting up more than 30 per cent initially, before settling back to just over 20 per cent up.
Others in the British banking sector also rose, with Barclays and NatWest up close to 2 per cent.
Lenders are on the line to pay out up to £18bn in compensation to those affected, but the ruling found them not liable for hidden commission payments which could have sent reimbursement costs soaring.
Full details here and what the lenders have said:
Major lenders see share prices surge after car finance mis-selling ruling
FTSE 100 continues revival - up 0.5% on Monday
10:28 , Karl MatchettThe FTSE 100 has continued to surge higher this morning as investors digest weekend news and take stock.
Between car finance uncertainty and Trump tariff changes, last week definitely ended on a low note - but the FTSE 100 is up 0.5 per cent this morning.
That’s led by Lloyds rising more than 7 per cent, but the likes of Rolls Royce, Barclays and miner Antofagasta are all up more than 2 per cent too.
In Europe, Germany’s DAX is up 1.3 per cent, France’s CAC 40 is up 0.9 per cent and the pound to the dollar rate is up 0.13 per cent to $1.3296.
Shein fined yet again over environmental claims
10:43 , Karl MatchettChinese-founded fast fashion company Shein, who had been exploring an IPO in London until earlier this year, have been fined 1m euro (£870,000) by the Italian competitions authority.
The huge fee is over misleading customers on environmental claims, saying recyclable information was “false” or “confusing”, along with overstating the impact their design had.
Shein’s claims were “sometimes vague, generic, and/or overly emphatic, and in other cases omitted and misleading,” read the report.
Even so, the 1m fine pales into comparison to the 40m euro fine (£34.8m) fine given to Shein by French authorities last month over fake discounts and similar misleading environmental claims.
Car finance mis-selling 'unlikely to be a repeat of the PPI scandal', says expert
11:00 , Karl MatchettWhile the Supreme Court’s ruling last week means lenders could have to pay out between £9-18bn to consumers affected, it won’t be another PPI scandal, says one expert.
AJ Bell investment director Russ Mould said that while it wasn’t an outright victory for lenders, the ruling payouts should ultimately be covered by what banks have set aside.
“Lloyds has confirmed what everyone will have guessed based on last week’s Supreme Court ruling on motor finance mis-selling. The worst-case scenario, like a particularly ugly pothole, has been swerved,” said Mr Mould.
“This wasn’t a complete win for the industry, with lenders still potentially on the hook if the relationship with customers meets the threshold of being unfair.
“This, and subsequent comments from the FCA about setting up a compensation scheme which could still result in hefty payouts may have created mild concern, but Lloyds has notably confirmed any further provisions in this area are unlikely to be material.
“Barclays shares also got a boost, albeit a more limited one reflecting its lesser exposure in this area, while Close Brothers, which had almost been sent to the scrapyard by investors over the affair, sparked into life off the back of the Supreme Court judgement.
“Essentially, while this issue could still cause some damage, it looks unlikely to be a repeat of the PPI scandal which blighted the banking industry in the 2010s.
“The gap between existing provisions by lenders and the sums being talked about by the FCA is substantial but this could partly reflect the fact that the finance arms of the major car manufacturers do not seem, to date, to have made material provisions in this area.”
Car finance claims: 'Don't rush' to sign up, says expert
11:28 , Karl MatchettPeople who think they might be owed compensation for the car finance mis-selling ruling shouldn’t speed out to sign up with claims firms, believes Paul Barker, editor at Auto Express.
“Today’s Supreme Court ruling - which found that car finance firms did not unlawfully mis-sell products simply by failing to disclose commissions – narrows the scope for car finance compensation claims, but it doesn’t eliminate them entirely. Anyone who signed up for a Discretionary Commission Arrangement (DCA) between 2007 and 2021 should still be eligible for compensation; the FCA is expected to set out next steps regarding this ruling in the coming weeks.
“In the meantime, we strongly advise against using claims management firms, which often take a hefty cut of any compensation. Instead, there are free tools and official routes available to help you make a claim directly. And if the FCA introduces the mooted ‘opt-out’ scheme, you may not need to do anything at all – your lender will be required to contact you. Until then, sit tight, avoid unnecessary fees, and keep an eye on updates from the regulator.
“However, it is worth pointing out that there may still be further legal twists and turns as the case evolves.”
£18bn car finance payout scheme 'completely impractical', claims industry leader
11:45 , Karl MatchettPayouts for the car finance compensation scheme have yet to be determined, with the FCA now starting a review.
But one industry insider says it’s far from clear how compensations will be awarded or even how eligible customers could be decided.
“I just think that is completely impractical. It is not just firms that don’t have the details about contracts back then, customers don’t either,” said Stephen Haddrill, director general of the Finance & Leasing Association, on BBC’s Today programme.
Lenders are set to be subject for between £9-18bn in payouts.
Metlen starts trading on London Stock Exchange - new addition for FTSE 100
12:00 , Karl MatchettGreek energy and metals group Metlen, which used to be called Mytilineos Energy and Metals, has begun trading today on the London Stock Exchange.
It’s real relevance will come with the next FTSE 100 index reshuffle next month; with a market capitalisation value of £5.4bn, it will be big enough for inclusion.
Housebuilders Berkeley Group and Taylor Wimpey are the smallest in the 100 at present by the same valuation, around £3.5bn.
Compensation scheme will be free to use - FCA
12:20 , Karl MatchettNikhil Rathi, chief executive of the Financial Conduct Authority (FCA), said on Radio 4’s Today Programme that the proposed compensation scheme will be free to use for all.
Several firms offer no win no fee style of claims on your behalf to seek out car finance compensation but they can take anywhere up to almost a third of the eventual payout.
“We have taken action against 225 adverts because there have been exaggerated claims out there,” he said.
“If you sign up to these companies you may lose up to 30% of any money you are owed.
He further outlined plans to start a compensation scheme by October, with a view to compensation payouts next year.
US stocks poised to recover after last week's market sell-off
12:40 , Karl MatchettUS futures are pointing towards rises in the American stock markets this afternoon.
Many stocks suffered steep falls on Friday in the wake of Trump’s latest tariff delay and rates announcements.
But the S&P 500 is poised to go 0.6 per cent higher, with the Dow slightly lower than that and the Nasdaq a full 0.75 per cent above closing levels from last week.
While much of Europe is in the green today - the FTSE 100 is up 0.2 per cent - the Swiss SMI is down 0.67 per cent.
Switzerland was hit by an unexpectedly high tariff of 39 per cent last week but markets were shut in the country on Friday, making today the first time it could show a live reaction from investors.
More than 3,000 Boeing workers who build fighter jets go on strike
13:00 , Karl MatchettOver 3,000 Boeing workers will begin striking Monday in Missouri and Illinois, after members rejected a four-year labor agreement with the aviation company.
The strike follows a landslide vote against a revised job contract on July 27, where 3,200 workers who build fighter jets declined the deal.
Workers assemble and maintain advanced aircraft and weapons systems, including the F-15, F/A-18 jets, along with a range of missile and defense technologies.
More here:
More than 3,000 Boeing workers who build fighter jets go on strike
Quoted home insurance premiums fall amid increasing competition
13:20 , PAAverage quoted home insurance prices are falling as competition across the market rises, according to an index.
Quoted premiums have typically fallen by 7.9% over the past year and by 3.9% over the past quarter, insurance market insights provider Consumer Intelligence said.
Premiums were most commonly quoted between £150 and £199, with 29% of quotes falling within that range, according to Consumer Intelligence’s data.
More from PA:
Quoted home insurance premiums fall amid increasing competition, study finds
BP confirms biggest oil and gas field discovery in 25 years – three times the size of Paris
13:40 , Karl MatchettEnergy giant BP has announced its biggest oil and gas field discovery in 25 years after a drilling off the coast of Brazil.
The company’s vice president for oil production, Gordon Birrell, said it was a “significant discovery” and the largest since 1999, when a giant gasfield in the Caspian Sea was discovered. It is expected to contain a mix of gas and oil as well as condensate, which is a liquid form of natural gas.
The size of the field in the Bumerangue prospect is more than 300 square kilometres – about three times the size of central Paris.
Tesla approve $29bn share handout to Elon Musk
14:17 , Karl MatchettTesla CEO Elon Musk will receive an award of 96m shares of the company, worth an estimated $29bn.
As part of his pay structure, Musk will be able to buy the shares two years from now as long as he stay CEO, for $23.34 - they currently trade at more than $310.
Musk has been criticised in some quarters for splitting his attention across multiple companies, as he owns social media platform X, space firm SpaceX, drilling firm The Boring Company and more.
High street banks lost £100bn in customer savings to rivals since 2019
16:00 , Karl MatchettHigh street lenders have lost the equivalent of £100 billion in customer savings to online banks and building societies as they come under pressure to adapt amid a major shift in the sector, according to a report.
KPMG’s latest State of the Banks report found that traditional banking groups saw their market share in deposits drop sharply from 84% in 2019 to 80% in 2024.
It came as competitors – such as new challenger banks, specialist lenders and building societies – lured customers away by paying higher savings rates.
Full details from PA:
High street banks lost £100bn in customer savings to rivals since 2019 – report
Business news live - Monday 4 August
16:30 , Karl MatchettThat’s it for us today - we’ll be back tomorrow with business news, company updates and stock markets latest on Tuesday from 7am - catch you then.
