Martin Lewis issues warning over huge car finance compensation ruling despite £1k payouts

Martin Lewis has warned a car finance ruling expected today could have major ramifications for "consumer lending" and the wider economy, warning the outcome could do "more harm than good". The Supreme Court will announce its decision on car finance discretionary commission payments this afternoon after weeks of deliberation.

If the previous Court of Appeal ruling is upheld, lenders could be liable to pay out up to £44billion in compensation to motorists. Martin - founder of Money Saving Expert - has previously predicted that drivers could secure more than £1,000 each in what could be a major win for consumers and drivers across the UK. However, he admitted this outcome could backfire with restrictions on credit possible as lenders battle to find the money to pay those affected.

Speaking to the BBC, Martin said: "If the Supreme Court upholds the Court of Appeals decision, the knock-on effects could be substantial on other forms of lending and the economy.

"To be honest, it could shake the foundations of consumer lending in the country, meaning less possible available credit for many.

"So much so that even I, and I try and champion consumers in the work that I do, have concerns. I’ve said this since day one in this case that it could do more harm than good.

"It’s therefore unsurprising that we’ve heard talk that the Chancellor could even intervene with retrospective legislation if the Supreme Court were to uphold in full what the Court of Appeal says."

There hs been speculation Chancellor Rachel Reeves could intervene after the Supreme Court decision to protect lenders. It has been suggested the Government could retrospectively change the law, which would cut liabilities for lenders.

It is understood Labour is looking into the move after months of lobbying by the Financing & Leasing Association (FLA), who represent car lenders across the UK.

Martin added: "There are proper ramifications right across the economy for that one so it is going to be huge news on Friday. Especially if the Supreme Court upholds the ruling. I do suspect we will see the regulator, the FCA, and the Government, the Chancellor getting involved.

"Though they may not do it on Friday, they may want time to digest what is happening, Whatever happens, this one is going to play out. The Supreme Court ruling is the start, not the end of this."