KBRA Releases Research – Motor Finance Litigation: Potential Implications for UK Auto ABS
6 Aug 2025 | Dublin
KBRA releases a report commenting on the UK Supreme Court’s recent judgment regarding discretionary commission arrangements (DCA), as well as the Financial Conduct Authority’s (FCA) subsequent regulatory response.
On 1 August, the UK Supreme Court upheld key aspects of an earlier Court of Appeal ruling, confirming that inadequate disclosure of commission arrangements can, in certain cases, create an “unfair relationship” under Section 140A of the Consumer Credit Act 1974. While the case involved a legacy DCA-era agreement, the ruling provides broader guidance on commission transparency and may have implications for origination practices and legacy exposure reviews across the UK auto finance sector. The KBRA report also considers the potential impact of the ruling on UK auto ABS transactions. While most post-2021 transactions are expected to have limited direct exposure to DCA-related risks, the Supreme Court’s decision may introduce interpretive and operational challenges. KBRA will monitor developments as the FCA’s consultation progresses and will assess the implications for rated transactions on a case-by-case basis.
Click here to view the report.