As the motor finance commission issue approaches a possible turning point with a Supreme Court ruling due in July, Lloyds Banking Group CEO Charlie Nunn has said that consumers suffered no harm from the bank’s lending practices.
His claim, delivered to MPs during a Treasury Select Committee hearing, rests on the claim that Lloyds’ motor finance arm, Black Horse, consistently offered some of the lowest interest rates in the market. Therefore, even where commission arrangements were not disclosed, customers were unlikely to have found a better deal elsewhere.
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Julian Rose, Director at Asset Finance Policy Limited, broadly agrees with this line of reasoning. “In the case of Lloyds,” he says in a recent blog, “from at least the time the FCA took over consumer credit, its Black Horse car finance arm has typically offered some of the lowest rates in the market. So in most cases, it seems implausible that customers could [have] made any material savings by shopping around.”
However, Rose draws a critical distinction: under FCA rules, the burden of proof does not fall on customers to demonstrate that they were financially disadvantaged. If the Supreme Court confirms that lenders were required to disclose commission arrangements, it will be up to the firms themselves to prove that customers were not harmed.
“In my view,” Rose says, “it will not be for consumers (or their representatives) to show evidence of harm. It will be for the car finance companies to show evidence of no harm. That means for each agreement, they will need evidenced that the rate provided was competitive with an industry benchmark rate.”
In other words, the burden of proof lies with the lender. If the Supreme Court confirms that lenders were required to disclose commission arrangements, it will fall to the firms, not customers, to show that a lack of disclosure did not cause financial harm.
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By GlobalDataRose describes the burden of proof falling on the lender as: “a challenge but still very achievable. For each year, there needs to be a standard table showing benchmark rates for similar loans and for similar customers e.g. similar credit score. Where the customer paid near the benchmark or below it, then it should be reasonable to assume there was no harm.”
If rates were materially higher, and the customer lacked sufficient information to make an informed decision, redress may be required.
Rose also believes that for most lenders, not just Lloyds, the number of materially affected customers is likely to be relatively small. But where firms cannot provide strong evidence to back that view, they should prepare to compensate.
The operational question now, Rose concludes, is whether lenders have the systems, data and documentation in place to demonstrate that their pricing was fair.
Which brings us back to Nunn. A point of apparent inconsistency in his testimony before MPs, is the claim that Lloyds has seen no evidence of harm, despite the bank making two sizeable provisions. The first, £450 million in 2024, related to the FCA’s review of discretionary commission arrangements. The second, £700 million in 2025, followed the Court of Appeal’s ruling on commission disclosure.
If Lloyds maintains that no customer detriment occurred, it is difficult to view the £450 million provision as covering only the operational costs of responding to law firm claims. More plausibly, these provisions reflect the scale and complexity of demonstrating no harm across a large volume of historical agreements, some potentially dating back to April 2007, when the Financial Ombudsman Service began handling complaints about this type of consumer credit.
That reading aligns with Rose’s argument: with the burden of proof on lenders, any firm unable to produce clear evidence of fair pricing risks being caught out if the FCA sets up a redress scheme.
