The Supreme Court rejects the foreign minister’s commitment to intervene in the case of financial compensation

The Supreme Court has rejected the attempt of Foreign Minister Rachel Reeves to intervene in a historical case on the hidden commissions in the finances of cars, giving a blow to the lenders who face a compensation bill that is potentially millions.

Reeves had urged the court to avoid what she described as “unexpected gain” payments to the borrowers who without knowing it charged additional rates due to the secret agreements of the commission between lenders and car merchants. However, the judges dismissed the chancellor’s request, submitted in January, in a ruling that shook the financial markets.

The actions of Motor Finance Praweers, which had increased after the intervention of the treasure, fell sharply on Monday. Lloyds and Close Brothers, two of the largest cars loan suppliers in the United Kingdom, saw that their shares decreased by 3.8% and 8.5%, respectively.

The Reeves intervention occurred after the pressure of motor finance suppliers, who argued that mass compensation payments could destabilize the sector, which leads to lower availability of higher loans or interest rates. However, the chancellor denied the accusations of giving in the lobbying of the financial industry or acting against the interests of consumers.

“There is nothing pro-consumption in making it more difficult for people to buy an affordable car for your family. That would be bad for working families, ”Reeves said last month in the World Economic Forum in Davos, Switzerland.

The car financing scandal has made comparisons with the infamous crisis of incorrect sale of the payment protection insurance (PPI), with analysts that warn that the final cost for lenders could reach the £ 44 billion.

The controversy broke out after a ruling of the October Court of Appeals drastically expanded an investigation by the Financial Behavior Authority (FCA) on car financing commissions. The Court determined that car dealers who received unleashed commissions to organize loans had been involved in illegal practices.

The lenders, including Close Brothers and Firstrand, now seek to revoke that decision at a Supreme Court hearing scheduled for April 1 to 3.

Gary Greenwood, Shore Capital bank analyst, said the rejection of the Supreme Court of Treasury intervention was “a disappointment for the market.” Although the result of the case remains uncertain, “we hope that a common sense failure can be achieved that punishes those who deserve to be punished while saving those who do not.”

The Supreme Court also dismissed the intervention attempts separate from the Consumer Voice Consumer Campaign Group and the Financing and Lease Association (FLA) representing car financial companies. However, the FCA has been awarded permission to participate, together with the National Association of Franchise Distributors (NFDA), which represents car dealers.

Sue Robinson, executive director of the NFDA, commented on the decision, said: “NFDA has obtained today the permission of the United Kingdom Supreme Court to intervene, and make written and oral presentations, in the appeal of the Supreme Court against the decision On the Motor Financing Commission in Johnson V Firstrand Bank Limited, Wrench V Firstrand Bank Limited and Hopcraft V Close Brothers.

“We have assured the services of Caytons, a company by Gallagher Bassett, Jonathan Kirk Kc and Richard Roberts (both of Gough Square Chambers) to represent NFDA in those procedures, which appear to listen between April 1 to 3, 2025. NFDA , as the representative of the consumer part facing the sector, includes the needs of the United Kingdom consumers. “

Meanwhile, the Consumer Voice co -founder, Alex Neill, expressed his frustration for the court’s decision to reject the intervention of his organization. “An overwhelming majority of automobile financing customers have told us that they are concerned about the paid commission of dealers. People trust their car dealership to act in their best interest in organizing finance. However, this trust is being clearly abused by some distributors in the market. “

Until the decision of the Supreme Court is issued, the motor finance sector faces continuous uncertainty about potential compensation liabilities and the broader implications for consumer loans.