The UK Supreme Court has rejected Chancellor of the Exchequer Rachel Reeves' request to intervene in a controversial car loan case. The case is scheduled to be heard in April, and its outcome will have a significant impact on the car loan market.
Read Also...:
US intelligence agencies believe Israel is likely to strike Iranian nuclear facilities this year
02-22, 2025
ASIO boss says three foreign governments plotted to hurt critics in Australia
02-22, 2025
Donald Trump's attempts to denigrate Volodymyr Zelenskyy have led to a surge in Ukrainian unity
02-22, 2025
Bodies found in Scotland river confirmed as missing sisters Eliza and Henrietta Huszt
02-22, 2025The Supreme Court case, set to begin in April, will determine whether lenders should explicitly inform customers of the commission amounts they receive when selling car loans. Previously, the Court of Appeal ruled last year that lenders should increase transparency, but lenders appealed this ruling, thus triggering the April case. The Treasury attempted to intervene in the case last month, citing concerns that the ruling would reduce the supply of car loans.
The Treasury told the BBC that it respects the Supreme Court's decision on Monday to reject its request to intervene. The vast majority of new cars, as well as many used cars, are purchased through financing agreements. In 2021, the Financial Conduct Authority (FCA) banned the practice of dealers receiving commissions from lenders based on the interest rates charged to customers. The agency stated that this practice incentivized dealers to charge buyers higher interest rates than necessary.
Since January of this year, the Financial Conduct Authority has been considering whether to offer compensation to those who entered into such deals before 2021. This has raised the possibility that banks and other lenders may need to pay out millions of pounds in compensation. Last month, a ruling by the Court of Appeal expanded the scope of those who may be eligible for compensation. Some analysts estimate that the total compensation could be as high as £30 billion, potentially making this the largest compensation scheme involving financial products since the Payment Protection Insurance (PPI) scandal.
The government stated last month that while it wants to ensure customers are compensated, it also wants the automotive industry to continue to "support millions of vehicle owners in owning vehicles." At the time, the government expressed concerns that the amount of compensation paid by lenders could weaken the competitiveness of UK banks. A Treasury spokesperson said on Monday: "We respect the court's decision not to grant our application to intervene... and will follow the matter closely." The court also rejected applications from consumer rights advisor Consumer Voice and industry association Finance & Leasing Association to intervene in the case, but approved applications from the Financial Conduct Authority and industry association the National Franchised Dealers Association.
The courts have limited time and therefore sometimes reject intervention applications from parties they believe may provide similar evidence. Wayne Gibbard, head of automotive finance at law firm Shoosmiths, said: "It is highly unusual for the government to intervene in a court ruling with which it has no direct relationship, particularly in pursuit of policy issues." Following the news, UK bank stocks fell on Monday, with Lloyds Banking Group down 4% and Close Brothers Group down nearly 15%.
