Chancellor Rachel Reeves' intervention in a significant Supreme Court case regarding car loans was blocked, as the court prepares to hear an appeal from finance firms in April. The Court of Appeal previously ruled it was unlawful for lenders to pay commissions without customer consent and stated those affected should be compensated. This could result in about £30bn in payouts. The FCA's 2021 ban on commission deals aimed to prevent inflated interest rates but raised concerns about the financial impact on banks that support car ownership.
The Supreme Court's decision blocks the Chancellor’s intervention, affirming a prior ruling that lenders' unconsented commissions could lead to a massive financial compensation requirement.
The upcoming Supreme Court case in April could require finance firms to potentially pay out as much as £30bn to affected customers.
The Financial Conduct Authority's 2021 rules restricted dealer commissions, revealing deeper issues regarding borrower consent and potential overcharging.
There are fears that the scale of compensation linked to these car finance schemes might undermine the competitiveness of UK banks.
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