1:49 pm, July 9, 2024
Barclays bank is seeking a judicial review of the Financial Ombudsman Service’s (FOS) ruling that it treated customers ‘unfairly’ in relation to discretionary commission arrangements.
The landmark decision, passed in January, sparked the ongoing investigation into the motor finance sector, which has rocked the industry over recent months.
According to the FOS, a customer, simply referred to as Miss L, had not been made aware that her payment package included a £1,600 commission to a credit broker – in her case the dealer she bought the vehicle from.
The situation was flagged with the Financial Conduct Authority (FCA), which subsequently launched a market-wide inquiry into potentially unfair vehicle loan deals struck before January 2021, which was when the regulator banned the practice.
Car Dealer reported back in April that Barclays was in the process of appealing the landmark decision and the Times now says that the bank lodged an application for a judicial review back in January.
Any review would see the High Court investigate the lawfulness of the decision made by the ombudsman, as a public body.
The same report states that the watchdog is ‘challenging’ the application as it ‘seeks to block’ a review.
A spokesman for Barclays, said: ‘We do not agree with the Financial Ombudsman Service’s decision in this case and are therefore challenging it.
‘This challenge relates to a single, specific case and separately we continue to support the Financial Conduct Authority’s review into historic motor financing arrangements. Due to the ongoing nature of this case, we cannot share anything further at this time.’
Meanwhile, a Financial Ombudsman Service spokeswoman revealed that the body had heard from more than 30,000 people with concerns that they were charged too much for their finance.
‘When people take out a car loan, it’s imperative they are treated fairly and the financial implications are totally transparent,’ she told The Times.
In response to the unfolding crisis, consumer Champion and journalist Martin Lewis was prompted to create a free reclaim tool and guide via his company MoneySavingExpert that allowed potentially affected consumers to check whether they had been mis-sold car finance.
According to an article on the website, the tool received a whopping 1.08m inquiries in its first month of being live, prompting Lewis to state that it could be one of the biggest scandals since the mis-selling of PPI, which saw banks exposed to a bill of £50bn.
