8:31 am, January 21, 2025
The motor finance scandal took a fresh twist yesterday after chancellor Rachel Reeves stepped in to try and protect lenders from multi-billion-pound payouts.
In April, the Supreme Court will hear an appeal from Close Brothers in relation to last year’s bombshell High Court ruling, which sparked chaos in the automotive finance industry.
Ahead of the hearing, Reeves has written to a ‘proportionate’ response amid fears about how the crisis could impact the wider UK economy.
There are currently mounting concerns that if the appeal is unsuccessful, major lenders could pull out of Britain with Santander said to among those considering its future.
Against that uncertain backdrop, Reeves has taken the unusual decision of getting involved as the government looks to defend Britain’s reputation as a place to do business.
The Financial Times has seen a submission to the court from the Treasury, in which it claims the case has ‘the potential to cause considerable economic harm and could impact the availability and cost of motor finance for consumers’.
The application adds that the case could ‘generate a perception that regulation in the UK is uncertain’.
In the case of the appeal being unsuccessful, Reeves is said to have asked that ‘any remedy should be proportionate to the loss actually suffered by the consumer and avoid conferring a windfall’.
While the move to intervene in proceedings is rare, it is allowed under the Supreme Court’s rules. Ever since being set up at the UK’s highest court in 2009, official bodies, such as the Treasury, have been allowed to apply to intervene in cases.
Despite getting involved in the ongoing appeal, sources close to the Treasury have denied that they are ‘taking sides’, the FT reports.
Close Brothers was officially granted its appeal back in December when the Financial Conduct Authority also hinted that it too could intervene by ‘sharing expertise’.
You can read more about the ongoing commissions scandal on the Car Dealer website.
