9:00 am, January 25, 2025
The boss of Lloyds Banking Group has welcomed the chancellors intervention into the ongoing motor finance scandal amid further calls for ‘clarity’ over the situation.
Car Dealer reported earlier this week that the treasury, led by Rachel Reeves, had written to the Supreme Court ahead of it hearing Close Brothers’ appeal against last year’s landmark ruling, which sparked chaos in the sector.
In an unusual step, the treasury asked that it be allowed to give evidence in the case as Reeves looks to protect the wider UK economy.
Fears have arisen over recent days that some lenders, such as Santander, could pull out of the UK as a result of the current uncertainty.
Now, speaking at the World Economic Forum in Davos, Lloyds boss, Charlie Nunn said that the chancellor’s input could prove significant.
He told The Times: ‘We definitely welcome the intervention. We just believe the market needs clarity.
‘80% of people need finance to buy a new car, and a large number of second-hand car buyers do as well. We need a well-functioning motor finance industry that supports consumers.’
Nunn said last year that the High Court’s bombshell ruling last year had caused an ‘investability problem’ for the UK.
Speaking from Switzerland, he had now said that the issue has been raised by the bank’s investors.
He added: ‘We have had lots of our investors asking how the regulatory regime can be overwritten retrospectively, by the Court of Appeal so easily.
Lloyds, which owns lender Black Horse, has put aside an eye-watering £450m to deal with potential payouts to customers who were mis-sold finace packages.
In its most recent set of annual accounts, published last February, bosses said the money would cover potential operational and admin costs, which were expected as a result of the ongoing FCA investigation into car finance.
Writing before the Court of Appeal ruled against Close Brothers, the bank said: ‘There remains significant uncertainty on the extent (if any) of any remediation action, and we believe we complied with regulation at the time, so we welcome the FCA review to provide clarity.’
Main image: Charlie Nunn outside the offices of the Financial Conduct Authority (PA)
