Shares in Lloyds (LLOY.L) and Close Brothers Group (CBRO.L) fell on Friday after London's Court of Appeal ruled that motor finance brokers owe duties to their customers.
The Court of Appeal's ruling, allowing three linked appeals brought by consumers, comes as Britain's finance watchdog mulls a potential billion pound-plus consumer redress scheme.
Close Brothers shares fell 15% after the ruling, which the company it intends to appeal to the United Kingdom's Supreme Court.
The group also said it would temporarily pause the writing of new UK motor finance business "while we review and implement any relevant changes to our documentation and processes to ensure compliance with these new requirements."
Shares in Lloyds, one of a number of key providers of motor finance, fell 3%.
The bank said in February it had set aside some 450 million pounds ($584 million) to cover the potential cost of the Financial Conduct Authority's probe of the motor finance sector.
The Court of Appeal said in a summary of its ruling that brokers owe a fiduciary duty to consumers, which imposes "an obligation on the part of the broker to act in the best interests of the customer and not to put themselves in a position of conflict".
This meant brokers cannot lawfully receive a commission from lenders "without obtaining the customer's fully informed consent to the payment", the court added.
($1 = 0.7704 pounds)
