Chancellor exploring route to overturn impending ruling on motor finance
The Chancellor is considering overruling the impending Supreme Court verdict on the motor finance scandal if it rules in favour of the lenders, after the Treasury failed to intervene in the landmark case.
According to The Guardian, Treasury officials have been discussing the feasibility of overturning the Supreme Court’s decision with the Ministry of Justice and the Department for Business, Energy, and Industrial Strategy.
If the Supreme Court sides against the lenders the Chancellor is currently exploring if the Treasury can step in to overrule the top court.
Back in February, the top court rejected the Treasury’s application to intervene in the upcoming hearing. The government has been concerned that the pending fines could lead to companies withdrawing from the sector and prevent customers from accessing credit.
The landmark case went in front of the Justices in April for a three day trial at the UK’s top court.
The Guardian reported that potential new primary legislation would give Parliament the final word over the handling and disclosure of commission arrangements to borrowers rather than a judge.
The mis-selling scandal has the potential to cost lenders billions of pounds, with one Moody’s analyst quoting £30bn in compensation.
The case stemmed from a Court of Appeal judgment handed down last October, which stated that lenders did not obtain consent from customers regarding the amount of commission they charged on motor finance.
The two lenders involved in the case are merchant bank Close Brothers and South African lender Firstrand.
The lending sector has been anxiously awaiting the Supreme Court’s decision, which was rumoured to be handed down next week, ahead of the court’s Summer term. However, according to the forthcoming notices, this ruling is not yet to be revealed.
Andy Agathangelou, founder of consumer advocacy group Transparency Task Force said: “Assuming today’s reporting is accurate, this is at least the second time the Chancellor of the Exchequer has hoped to intervene, or should I say interfere, with the judicial process surrounding the car finance scandal.”
A spokesperson for the Treasury said: “We don’t comment on speculation. We want to see a balanced judgment that delivers compensation proportionate to losses that consumers have suffered and allows the motor finance sector to continue supporting millions of motorists to own vehicles. It is now appropriate to let the appeals process run its course.”