8:59 am, January 22, 2025
Automotive finance providers Lloyds and Close Brothers saw their share prices soar yesterday after the chancellor’s intervention into the ongoing commissions scandal.
Car Dealer reported yesterday (Jan 21) that Rachel Reeves had taken the unusual step of writing to the Supreme Court ahead of it hearing Close Brothers’ appeal against last year’s landmark ruling, which sparked chaos in the finance sector.
In the submission, the treasury argued it should be allowed to give evidence in the upcoming hearing with Reeves pleading for a ‘proportionate’ response as she looked to protect the UK economy.
The letter which was first reported by the Financial Times also warned that the case ‘could generate a perception that regulation in the UK is uncertain’.
Following the intervention, Lloyds and Close Brothers, two other the biggest players in the sector, saw their share prices rise 4% and 21% respectively.
Lloyds, which owns finance giant Black Horse, has been critical of the High Court ruling since it was passed down in October, with the bank’s boss saying it has created an ‘investability problem’ for the UK.
Lawyers for those who could be in line for compensation payments criticised the intervention.
Elizabeth Comley, chief operating officer of the law firm Slater and Gordon, said her firm represents ‘tens of thousands of individuals who have been unfairly impacted’ by car finance sellers’ practices.
She said: ‘While we recognise the importance of maintaining confidence in British lenders, this cannot come at the expense of justice for the individuals affected.
‘Consumers deserve accountability and redress when they have been wronged, and Rachel Reeves’ attempts to shield lenders from the consequences of their actions risk undermining public trust in the financial sector as a whole.’
The move comes after Ms Reeves has pushed regulators to cut red tape in a bid to support economic growth and make the UK financial services sector more competitive.
A Treasury spokesperson said: ‘We want to see a fair and proportionate judgment that ensures compensation to consumers that is proportionate to the losses they have suffered, and allows the motor finance sector to continue playing its role in supporting millions of motorists to own vehicles.’
