A trio of the UK’s largest motor finance providers, including Lloyds and Santander, are facing a High Court lawsuit alleging they undertook “anti-competitive practices” which led to customers purchasing second-hand cars being “overcharged” by a cumulative total of £1 billion over more than five years.

Black Horse, part of Lloyds Banking Group, has a 35 per cent share in the motor finance sector and faces claims of around £624 million. The case also argues that sector rivals Santander and MotoNovo Finance owe customers around £166 million and £209 million respectively.

The case was filed at the High Court’s Competition Appeal Tribunal by Doug Taylor, a councillor and longtime consumer advocate who is a member of the Financial Conduct Authority’s (FCA) consumer panel. Taylor’s case alleges that consumers were unknowingly charged higher interest rates due to a "network of anticompetitive agreements" between car finance providers and dealers between 2015 and 2021.

The alleged arrangement in place would have meant that car dealers were given greater commission in return for getting customers to agree to finance deals that charged a higher rate of interest.

The suit is understood to be an opt-out, meaning that all eligible borrowers will be automatically included in the action.

“With this legal action, I am standing up for people across the UK who have been affected by the actions of these companies, seeking justice and compensation for the financial losses they have suffered,” Taylor said.

FStech has reached out to Lloyds, Santander, and MotoNovo for comment.

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