A landmark case in the UK Supreme Court this week could force banks and lenders to cough up $90 bill in compensation over shady car loan practices. The scandal? “Flex commissions” – a scheme that let car dealers quietly inflate interest rates on loans to pocket bigger kickbacks from lenders.
Here’s how the rort worked
Lenders like banks and finance companies set a “base rate” for loans but allowed dealers to hike rates up to three times higher. The juicier the rate, the fatter the dealer’s commission. Guess what happened next? Vulnerable buyers – especially those with shaky financial literacy – got saddled with eye-watering repayments, while dealers laughed all the way to the bank.
In one UK case, a dealer scored a $3.5k commission on a $51k Audi loan by doubling the interest rate. Another pocketed 70 per cent of the loan’s total cost as a bonus. Sound familiar? Australia had its own reckoning: ANZ and Macquarie coughed up $85m in 2023 for flexing (subject to the approval of the Supreme Court of Victoria next month). ASIC banned flex commissions here in 2018.
Now, UK lenders Close Brothers and FirstRand are fighting to overturn a 2024 ruling that deemed these secret commissions unlawful. If they lose, the fallout could go global – including right here under in 10 per cent Trumpster Tariff land.
Why Australian banks should sweat
UK banks have already seen hundreds of millions wiped off their value since regulators began probing the mess. Lloyds has set aside $3 bill for compensation; Santander faces a $2.3 bill hit. Meanwhile, ASIC is sharpening its knives: a sweeping review of Australia’s car finance sector is underway, targeting unlicensed lenders and predatory rates. Initially, seven lenders are being scrutinised. It is also investigating specific cases of misconduct, such as unlicensed lending practices and excessive interest rates charged by companies like Money3 Loans Pty Ltd, Diamond Wheels, and Keo Automotive. Last year in the Federal Court ASIC alleged that Diamond Wheels engaged in unlicensed credit activity on 7,928 occasions between 24 September 2018 and 5 December 2019 and that Keo Automotive did so on 14,596 occasions between December 6, 2019 and April 26, 2024, being each time it performed or exercised the rights of a credit provider under the Diamond Wheels Contracts.
If the UK court upholds the ruling, expect a tsunami of class actions here.
Move over, VW sausages: Nissan’s sushi knives are here
Last week, we revealed VW’s wurst-kept secret: sausage sales outpaced car sales. Now Nissan’s serving up a $300 sushi knife with a kurozome finish (translation: very Godzilla). All 240 units sold out faster than a Z on the Nürburgring. Chef Hiro’s verdict? “Cuts tuna like a Z cuts apexes.” McLaren’s response? “Our brake issues are unacceptable, but at least we’re not selling cutlery.
New cars: shiny, techy … and broken
Talking about lemons: Its official new cars spend more time off the road than older ones. Soap dodger mag, Which?, just dropped a data bombshell: Uncomfortable truths about car ownership in 2025 and the elephant in the garage is that, newer cars spend a fifth more time off the road on average than older ones. So that new car you’ve paid big bucks for, and expected to depend upon, might actually end up spending more time being repaired than if you’d stuck with your old car or bought an older used model. Why? Supply chain chaos plus mechanics baffled by tech. Tony Rich (UK Auto Association): “Modern cars need a PhD to fix. We’re training mechanics with TikTok tutorials.” What to do: Taking note of reliability data for the model you’re thinking of buying is key. Beyond that, see if you can negotiate better servicing/breakdown terms from your dealership of choice, and make sure a courtesy car is included. The Range Rover Evoque PHEV (2019-) found more ways to go wrong than any other. Hybrids rule: Toyota’s non-plug-ins are the least likely to leave you stranded.
Volvo CEO musical chairs
Jim Rowan Volvo CEO for exactly three years was told adjo this week and was replaced by the old CEO, Hakan Samuelsson, 74, who left in 2009 after nine years in the job. Because when you’re stuck between US tariffs and Chinese market woes, why not reboot the noughties? Volvo’s share price has dropped almost 70 per cent since it was first listed in 2021. Jim seemed to be perfect for the job. He ran a vacuum cleaner company. Geely Holding owns Volvo which also makes Polestar and Lotus and will do badly with the Trumpster’s Tariffs. Samuelsson’s first move: Replace all safety tech with meatballs.
Trump’s tariffs: Mercedes sobs
Mercedes boss Ola Kallenius is out begging for a tariff truce. Let’s break it down: Last year, Mercedes shipped 324,500 rides to the US. Two-thirds? Straight-up imports. Even their Alabama-built GLE and GLS SUVs — fan faves — are rocking European insides (engines, transmissions, the works). Now, slap on new US tariffs? Ka-ching: a $5 bill hit this year alone. And don’t let the “Made in Alabama” stickers fool you. For 2025 models, official labels say just 10 per cent of those SUVs’ parts come from the US or Canada. Mercedes fires back: “Nuh-uh, our math says 35-40 per cent!” BMW’s US rides? Barely scraping a third stateside content. VW’s US game? Still heavy on imports. Their Tennessee plant opened in 2011, but Mexico ships most VWs, Europe handles Audis, and Porsches.
Porsche share price halves
Porker shares are going the way of Tesla depreciation. $162 in January, $78 yesterday. Plunging sales in China, customers not wanting EVs and Trumpy wanting Teslas has seen Porsche renew its religion of internal combustion and hybrid engines. Meanwhile in the USA car sales jumped ahead of Liberation day. New car prices are expected to rise 12 per cent. Meanwhile China’s Trump, Xi Jinping, 70, of Jade Hill Garden, northwestern Beijing, is trying to charm Euro car companies like Merc and BMW to make the middle kingdom the Alabama of car making.
Weekend racing watch
Japanese Grand Prix on Foxtel: Watch Yuki struggle in a dud car. Watch Ryo Hirakawa replace Jack Doohan in free practice. Watch Norris vs. Piastri at Suzuka. Bet on Lando. Mazda MX-5 Cup, Goulburn on Telex: Yours truly will heroically defend last place.
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