Three UK motor finance businesses are facing a class action in the High Court over claims customers were overcharged on used car loans between 2015 and 2021.

Black Horse, Santander and MotoNovo Finance, which control over half the UK’s car finance sector, are accused of applying excessive interest totalling nearly £1 billion. Black Horse faces £624m in claims, MotoNovo Finance £209m and Santander UK £166m.

The class action alleges that an anti-competitive network agreement between dealerships and finance providers resulted in customers being charged higher interest rates without their knowledge - benefitting retailers and credit brokers who received higher commission as a result.

Such discretionary commission was banned by the Financial Conduct Authority in 2021.

The High Court action is being led by Enfield Labour councillor Doug Taylor, who was told the Daily Telegraph the companies had taken advantage of their customers: ‘Affected consumers unknowingly paid more for their car loans because of the way these companies incentivised dealers.”

A Black Horse spokesperson said: "We are committed to ensuring customers have clear and transparent information so they can make informed decisions about the products they choose. Following the FCA’s motor finance market review, new rules were set out for the industry in 2021, which we have implemented. We continue to comply with regulatory requirements that apply in relation to the payment of commission and the disclosure of commission to customers.”

The competition appeal tribunal at the High Court will decide if the action can go ahead.