Treasury refused permission to intervene in motor finance battle
The Supreme Court has rejected the Treasury’s application to intervene in the upcoming hearing over the motor finance scandal.
Chancellor Rachel Reeves confirmed plans last month to intervene in the hearing, set to be in front of the Justices on 1 April.
After news of the rejection emerged, shares in Close Brothers slumped as much as nine per cent.
Shares in FTSE 100 giant Lloyds fell four per cent with Secure Trust Bank and Vanquis Banking Group, which have also been hit by the scandal, losing between 10 per cent and eight per cent.
The Treasury’s application to intervene in the proceedings followed concern in government – also expressed by lenders – that the resulting fines could trigger a withdrawal of companies from the sector and prevent customers accessing credit to buy cars.
The mis-selling scandal has the potential to cost lenders billions of pounds, with one Moody’s analyst quoting £30bn of compensation.
The case stemmed from a Court of Appeal judgment handed down last October stating that lenders did not receive consent from customers about 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.
With hundreds of millions of pounds on the line, both banks have taken their fight to the Supreme Court.
Speaking at the time, a spokesperson for the Treasury said, “We want to see a fair and proportionate judgement 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.”
However, it was revealed today that the highest court in the UK has refused the Treasury’s application.
Along with the Treasury, others that tried to get involved in the case were the trade body Finance Leasing Association, the National Franchise Dealers Association, the Financial Conduct Authority (FCA) and Consumer Voice.
According to documents seen by CityAM, the Finance Leasing Association and Consumer Voice applications were also refused.
The court granted the FCA and the National Franchise Dealers Association intervening applications.
Commenting on the decision, a Treasury spokesperson told CityAM, “We respect the Court’s decision to not grant our application to intervene in the Hopcraft case and will monitor it closely.”
Earlier this month, CityAM reported that Close Brothers swapped out Leeds-based law firm Walker Morris in favour of magic circle law firm Slaughter and May for the Supreme Court battle.